China’s current economic situation cannot be counted as optimistic. The country’s policies, obviously, are anxiously aimed at improving it, and there have been a number of stimulus measures in an attempt to revive growth. However, when viewed in aggregate, these policies often appear disconnected, and few have yielded tangible results. For every ten pro-growth policies, a single counterproductive one can easily negate their combined impact. As a result, policy efforts are often at odds with each other, undermining their overall effectiveness. This contradiction is particularly evident when it comes to improvements in employment, consumption, and broader economic growth. These issues are systemic, deeply tied to the overall business environment, and inherently difficult to resolve.
The employment data reflects the broader challenges. In 2024, around 30% of university graduates opted for "flexible employment", a term that often means working as food delivery drivers or rideshare drivers. Another 20% delayed employment or pursued further education. Traditional roles in state-owned enterprises or the civil service remain highly sought after, with competition ratios as high as 1:100.
While so-called “emerging professional fields” such as AI, data science, and new energy boast job placement rates above 95%, these benefits are limited to a small group of graduates. Traditional engineering fields like mechanical engineering remain relatively stable, yet this is merely because there have been shortages of workers in these fields, and factory work is still not considered an attractive career path. Meanwhile, liberal arts graduates, particularly in fields like literature, face an employment rate below 70%, with many left to fend for themselves. In today’s climate, passion seems to be valued over reason, and the job market for humanities graduates reflects that shift.
The geographical distribution of graduates in China also highlights a trend that challenges the idea of a unified national labor market. First-tier cities like Beijing and Shanghai attract nearly 50% of new graduates, yet significant salary disparities persist. In 2024, the average monthly salary for undergraduate graduates in these top-tier cities is around RMB 8,000, compared to just RMB 6,000 in second-tier cities. Despite the pay gap, some graduates are relocating to second- and third-tier cities to reduce their cost of living. The affordability of first-tier cities appears to be deterring many young people from settling there. At the same time, intercity competition is growing increasingly fierce and is likely to intensify in the coming years. Young talent is concentrating in a handful of cities, drawn by market opportunities and stark differences in regional fiscal strength. This pattern echoes trends seen in highly urbanized developing countries, such as those in South America. If current dynamics continue, cities outside the top tier may face long-term talent drain and economic stagnation.
The severity of the situation is also evident in market behavior. Even in first-tier cities, elite law firms are struggling to recruit qualified graduates. Many university-educated youth, particularly from less developed regions, now prefer to become delivery drivers or rideshare operators, where they can earn around 10,000 yuan a month—while hoping to eventually settle in a major city. Others, especially those from well-off families, aim for the civil service, seeking job security. Once coveted roles in top law firms now struggle to attract applicants. The liberal arts job market is clearly in crisis, and that’s entirely understandable given the broader structural issues.
Employment is tied to income, and income is closely related to consumption.
Encouraging consumption and tapping its potential as a growth driver is unquestionably the right direction, yet sustainable consumption growth depends on income growth. Income growth, in turn, depends on a stable foundation: businesses. Enterprises are the backbone of the economy. They must be willing and able to operate, innovate, and create jobs. Currently, private enterprises, the primary drivers of employment and income, are facing a poor operating environment. This has become an unspoken but widely acknowledged reality.
For decades, improving the "business environment" was at the heart of China’s policymaking. Back then, government-run business environment surveys were conducted annually at every level, and they were often tedious and frustrating. Today, these surveys have become rare. Ironically, even as policymakers now boast higher academic credentials, many with doctorates and international experience, few pay attention to such surveys these days.
For a long time, Chinese policies have thrown their full weight behind efforts to boost consumption and drive growth, yet there has been limited success, and economic momentum remains sluggish. A key reason may be the lack of targeted, effective solutions. By the time the "lying flat" mindset spreads from university students and young people to entrepreneurs, and as waves of private enterprises face collapse, the country is already deep into a challenging crisis, where recovery becomes not only difficult but also costly
‘. Addressing this challenge requires not just strategic resolve but concrete, corrective action. For instance, unless restrictive labor laws and burdensome social security regulations are rolled back, any future attempts to "stimulate consumption" may depend entirely on direct handouts from government bodies at all levels.
The establishment of a unified national market in China is undoubtedly a strong and promising concept, depending on how one interprets it. The primary goal of such a market is to ensure a "solid foundation". The employment market largely relies on the private sector, which is a key component of the market economy. However, when private enterprises are stagnant or unwilling to grow, the stability of the foundation becomes an issue. To build a unified national market, the first step must be to have a functioning market in the first place. In this context, the most important task is to make a firm decision to improve past radical policies. When policies address market economies, it would be unrealistic to try to boost every single sector at once. Focusing on a few areas to "stimulate growth" may seem like an obvious approach, but it often misses the mark. Therefore, policy intervention in a market economy is limited, as it is impossible to address every sector in detail. What truly stimulates, drives, and improves the business environment are macro-level policies that have a broad and significant impact. These are the levers that can actually drive change, stimulate the economy, and promote growth. Of course, among these macro policies, those that are superficial and ineffective will not do much help. What truly matters is the improvement of past radical policies, such as labor laws, social security regulations, discrimination in bidding processes, and industry restrictions, i.e., the policies that dictate what is allowed and what is not. Reforming these policies has a wide-reaching impact, effectively increasing income levels and substantially improving the business environment.
In recent years, there have been a number of radical policies in China, and the country has seen the arbitrary classification of companies into so-called "patriotic" and "non-patriotic" categories. The private enterprises that are still operating today, those that continue to create jobs, pay taxes, and support the economy, should truly be regarded as patriotic and the true pillars of society. Yet, the term "patriotic enterprise" has been co-opted by certain self-interested companies, often leveraging online traffic to claim this designation, with the clear aim of dominating the market. The unfortunate reality is that many market regulators and policymakers overlook this issue, allowing such practices to continue unchecked. This creates a tragic paradox: a large number of private enterprises have been unjustly labeled "non-patriotic," leaving them with little recourse. With few options left, choosing to "lie flat", to stagnating, and ultimately disappearing, the end result for many is the gradual extinction of their businesses.
Therefore, placing emphasis on macro-level policies and improving the business environment, while rolling back certain radical policies where possible, is key to stabilizing China’s economy in the long run.
