'Study hard and succeed,' they were told. China's elite Generation Z is quietly drifting instead.

China's youth unemployment rate stands at about 19% — nearly double that of the US — as a record 12.7 million college graduates enter the job market this year. An estimated 37 million jobs are missing compared to pre-COVID trends, while Alibaba, ByteDance and others quietly cut staff, with AI cited as a factor.

People walk past a screen displaying stock market and economic data in Shanghai, China. [EPA]

For months, Ma Rongjian, 27, did not tell his parents where he was. He had dropped out of a computer science master's program last year, but his parents believed he was still in graduate school. He did not want them to worry.

Every morning, as his dormitory roommates headed to class, he wandered aimlessly through Beijing — sitting in parks, watching stray cats. Earlier this year, he left for Dali, a city in Yunnan Province known for its scenic mountains and relaxed pace of life, and a gathering place for young Chinese drawn to a life of drifting.

Watching the rise of AI and a wave of layoffs at technology companies, he had become convinced that good jobs would be hard to find, and he could see no reason to keep studying. "In the past, everyone expected life to keep getting better and incomes to consistently rise," Ma said. "But now it's different. When I look at the future, I don't see much hope."

China's Generation Z — born in the 1990s and 2000s during the country's era of rapid growth — came of age believing that hard work and a good university degree guaranteed a stable life, and that surpassing their parents' standard of living was a given. But as the Wall Street Journal reported Saturday (local time), a mounting shortfall of jobs is turning the milestones of adulthood — financial independence, a steady career, marriage, children — into goals that feel increasingly out of reach.

As of last August, the urban youth unemployment rate for Chinese aged 16 to 24, excluding students, stood at about 19% — more than double the roughly 9% rate in the United States. The number of college graduates this year reached a record 12.7 million.

According to an analysis by Steven Barnett, an economics professor at the University of Hong Kong and a former IMF division chief for China, total urban employment in China is now about 7 percent below where it would have been had pre-COVID job growth continued — a shortfall of roughly 37 million jobs.

Zhang Tian, 27, studied landscape architecture, but the real estate bubble burst around the time she graduated in 2021. She was hired by a developer but laid off after six months; she lost a subsequent job at the end of last year. After five years together, marriage with her boyfriend remains out of the question. "Dating and loving someone is an emotional matter," she said, "but getting married and having children is an economic one."

A man walks past an Alibaba booth at the China International Supply Chain Expo in Beijing. [Reuters]

Chinese technology companies once went on hiring sprees in line with the explosive growth of internet platforms and e-commerce, but from the second half of 2021 they began cutting staff in earnest as tighter regulation and an economic slowdown took hold. More recently, advances in AI have accelerated the trend, with companies replacing workers in routine and repetitive roles or scaling back new hiring. Firms are aggressively recruiting specialists to develop and deploy AI while reducing demand for workers in conventional roles, raising the bar for young job seekers even further.

Major technology companies including Alibaba and ByteDance have been quietly reducing headcount without public announcements. People familiar with the matter said AI has been one factor driving the cuts. The pattern extends beyond tech — from film production to finance, companies across industries are using AI to trim new hiring.

Human resources managers at some companies said they no longer feel the need to hire inexperienced entry-level workers the way they once did, now that AI can handle much of the relevant work. These companies are deploying AI agents as "digital employees" in customer service, sales, accounting, data analysis and human resources management.

A study by Shanghai University of Science and Technology that analyzed about 700 million job postings across China's five largest recruitment platforms found that AI has most sharply reduced hiring demand for workers with one to three years of experience. "Today, large language models are taking over these tasks, and companies are eliminating low-wage entry-level positions," the report concluded.

A delivery worker passes a restaurant in Beijing, China. [EPA]

As full-time positions have dried up, young workers have turned to platform-based gig work — but that sector offers no safe harbor either. According to the New Employment Forms Research Center, a Chinese think tank, the number of flexible workers without formal employment contracts is projected to grow from about 280 million last year to about 320 million this year, accounting for more than 40 percent of all urban workers in China. Even those platform jobs — delivery, ride-hailing, live-streaming — are now under threat as robotaxis and various robots move in rapidly.

Chinese authorities are also growing uneasy. According to people familiar with the matter, when Vice Premier He Lifeng surveyed major companies last year on AI's impact on employment, some said more than 30 percent of existing jobs could disappear. The government subsequently warned companies not to cut jobs even as they adopt AI.

One company that replaced quality-control supervisors with AI was ordered to pay damages. According to court documents and the former employee's attorney, the company was ordered to pay its former worker about $38,000.

Another Chinese man whose map data collection work was taken over by AI filed for labor arbitration against his employer and won compensation.

Beijing's human resources and social security authority said last December that "employers must enjoy the benefits of technological advancement while also bearing social responsibility."

mokiya@heraldcorp.com