Why young people in China are losing faith in the future

Since such a stance does not bode well for the country’s economic future, Chinese authorities are responding by portraying the movement as a foreign-backed attempt to undermine national development and morale.

This is not a new tactic. When I led the opposition to China’s one-child policy, I was accused of colluding with hostile foreign forces to undermine the country through overpopulation. Now that China’s population decline is undeniable, I am accused of exaggerating the crisis and attacking China.

In fact, “lying flat” is a direct consequence of the one-child policy. Just as biological homeostasis – for example, preventing deviations in blood pressure or blood sugar levels – is necessary to prevent disease or death, so economic homeostasis requires maintaining the right balance between consumption and production.

Introduced in 1980 in the hope that a smaller population would improve employment, the one-child policy has had the opposite result. By reducing the number of children – known ‘super-consumers’ – it has weakened the bargaining power of households, with the result that the share of household disposable income in GDP has fallen from around two-thirds in the 1980s (broadly in line with similar economies) to just 44% today.

Weak consumption constrains development

This is why China’s domestic consumption and job creation remain low. Faced with declining household incomes and a weak social safety net, many workers are forced to work longer hours to make ends meet. And competition for jobs is so intense that those who have jobs feel pressured to work overtime just to keep them.

As a result, the average workweek in China has risen to about 49 hours-and in some cases as high as 60 hours-compared with 38 hours in the United States, 33 in Germany, 37 in Japan and 42 in Vietnam.

In addition, unemployment among China’s youth (ages 16-24) is particularly high, reflecting a mismatch between rising levels of higher education and an underdeveloped service sector. Policies to promote “talent dividends” and “new productive forces“, along with family pressure, have led to an increase in the number of annual graduates from 1.01 million in 2000 to 12.22 million in 2025.

However, weak consumption continues to limit the growth of the service sector-themain employer of recent graduates-to just 47% of jobs, well below the 70-80% typical of advanced economies with similar levels of tertiary education.

After China’s youth unemployment rate reached 21.3% in June 2023, the government suspended publication of the data for several months and then published revised, understated figures. But that apparently didn’t change the harsh reality. During last year’s civil service exams, 2.8 million job seekers competed for just 38,100 vacancies.

With the job market so bleak, some universities are moving to “de-educate” by offering vocational training to undergraduate students and encouraging graduate students to pursue more job-oriented master’s degrees. Not surprisingly, graduates who can rely on financial support from their one-child families are “lying low”.

A controversial privilege

But “layaway” – is a privilege. Among the millions of young Chinese who can neither find stable jobs nor rely on family support, many are forced to work in the gig economy – delivering food, working as cab drivers, couriers or live streaming. China now has about 240 million workers with flexible schedules – nearly a third of the labor force.

But major investments in AI, robotics, drones and autonomous driving are already cutting these jobs, with unemployment among 25-29 year olds hitting a record 7.7% in March – and this trend is likely to accelerate. Worse, unlike in the U.S., where AI adoption can ease persistent inflationary pressures, China’s aggressive AI push will increase deflationary pressures amid already weak consumption.

Of course, China’s combination of too few consumers (children), low household income and long working hours has also pushed hundreds of millions of workers into export-oriented manufacturing employment. The decline in the share of household income in GDP reflects the government’s fiscal empowerment and massive subsidies to industry, which have led to a pathological boom in production – similar to hypertension and hyperglycemia in the human body.

Thus, China now accounts for about 17% of global GDP and 28% of global manufacturing value added, but only 12% of global household consumption.

The economy needs balance

A more balanced economy would be healthier for both China and the world. China’s export-oriented model has hurt production abroad, especially in the US, its largest export market. The U.S. has responded by imposing duties, reducing the share of imports of goods from China to 8%, down from 22% in 2018.

If other countries follow suit, the more than five million technical graduates China produces each year for manufacturing jobs could have trouble finding work.

These weaknesses undermine the argument that China’s “engineer-led management” model is worthy of emulation. In any case, success in manufacturing and advances in infrastructure reflect more a continuation of the status quo.

It is China’s strong state control over resources that allows for rapid mobilization to achieve specific goals – often at the cost of social and economic equilibrium. The Qin dynasty (221-206 BC), which pioneered this approach and built the Great Wall of China, lasted only 15 years. The “Great Leap Forward” and the Chinese Communist Party’s “one child” policy followed the same logic.

Today’s boom in manufacturing also comes at the expense of demographic and even civilizational resilience. The share of household income in China is so low that many families struggle to raise even one child. Long working hours deprive young people of time to build relationships. The government’s pursuit of “new quality productive forces” combined with “declining education levels” narrows opportunities for family formation, resulting in delayed marriage, more single people, and lower birth rates.

High youth unemployment further discourages marriage while eroding the financial ability to raise children. China’s share of global output may have risen from 3% in 1990 to 28% today, but its share of global fertility has fallen from 17% to 6%, and is projected to fall below 3% by 2050.

China produces everything but the people it will need to sustain economic development in the long term. The problem is not that China’s young people are lying idle. The problem is that the country’s leaders are lying to them – and to themselves.

Yi Fuxian

Yi Fuxian, a senior fellow at the University of Wisconsin-Madison, has led the movement against China’s one-child policy. His book Big Country with an Empty Nest (China Development Press, 2013), originally banned, is now ranked number one in China Publishing Today’s Top 100 Books of 2013 in China.