A sweeping crackdown by Beijing on the country’s private sector, that began in late 2020, and its unwavering commitment to a zero-Covid policy, have hit the economy and job market hard.
In China’s seniority-based commercial structure, fresh graduates are the first batch of people to be laid off, because they just joined a company.
A record 10.76 million college graduates entered the job market this year, at a time when China’s economy is losing the ability to absorb them.
The youth unemployment rate has repeatedly hit new highs this year, rising from 15.3% in March to a record 18.2% in April. It continued to climb for the next few months, reaching 19.9% in July.
China’s economy is in bad shape and could stay that way for a while
The rate fell slightly to 18.7% in August, but still remains among the highest ever, data from the National Bureau of Statistics showed on Friday.
That means there are currently about 20 million people aged 16 to 24 out of work in cities and towns, according to CNN calculations based on official statistics that put the urban youth population at 107 million. Rural unemployment isn’t included in official data.
In a country with an aging population, the inability to rotate jobs to the educated young is likely to cause social disruption. In the meantime, Western companies are looking for alternative sources of supply - not because of pricing or political considerations, but because of the lack of a stable Chinese supply chain. Images of the Arab Spring come to mind.
Intrinsic to the concept of the Mandate of Heaven was the right of rebellion against an unjust ruler. The Mandate of Heaven was often invoked by philosophers and scholars in China as a way to curtail the abuse of power by the ruler, in a system that had few other checks. Chinese historians interpreted a successful revolt as evidence that Heaven had withdrawn its mandate from the ruler. Throughout Chinese history, times of poverty and natural disasters were often taken as signs that heaven considered the incumbent ruler unjust and thus in need of replacement.
When you study Chinese historical and polemical writing you can see this principle down to modern times. Rarely stated but implicit is a right and duty of the people to rebel against a dynasty or claque that has lost the mandate.
Chinese communists brilliantly used the idea against their various foes from the 30’s into the present by making a strong polemical case that “scientific socialism” was essentially Heaven (?, Tian) – which embodies the natural order and will of the universe – and bestows the mandate on a just ruler of China, the “Son of Heaven”. This is one of the key reasons that the CCP is locked into a pretense of believing stupidities and contradictions no matter what.
A successful rebellion has to choose whether to rebel against just Xi, or to directly attack the legitimacy of “scientific socialism”. I expect that is far too big a jump, and that if things continue to decay Xi will be the fall guy, the CCP will do “reforms” but remain in power.
China has a presidential “election” in October. This isn’t a general election like the U.S. The election is by the National People’s Congress, which is made of 2981 people.
However, my Chinese friend (now a U.S. citizen) told me that the People’s Congress has different factions who decide before the election whom they want as president. She thinks that it’s possible that Xi may be voted out of office.
Elite overproduction is a concept developed by Peter Turchin, which describes the condition of a society which is producing too many potential elite-members relative to its ability to absorb them into the power structure. This, he hypothesizes, is a cause for social instability, as those left out of power feel aggrieved by their relatively low socioeconomic status.
The reasons are all of the above for leaving China. Including industrial sectors being forbidden from doing business in China if the IP is sensitive.
The reasonsfor the Chinese meltdown are several but water remains the big problem.
Covid is only a social control at this point. Omicron is not that bad. Just recovered from it. A cold or the flu would have been worse.
The central problem for the west China relation in all of this, our firms make up a substantial amount of the production for export coming out of China. The stronger USD and soon appreciating EUR mean input costs are less in the west longer term.
Input costs in China are going to get totally crazy.
While we are offering them less expensive Russian oil and NG the RMB will drive those relations crazy if a depegging from the dollar happens. Meanwhile pegged or depegged the peg of old is a mess coming home to roost. China is in for very long term pain.
The truth because the RMB is pegged to the USD the Chinese economy has earned nothing at all in real terms.