Faced with record high youth unemployment and bankrupt local councils, the country’s population is beginning to feel the weight of the economy’s flaws
. Education, real estate and technology – industries that graduates previously flocked to – have been hit by a regulatory storm in recent years which annihilated millions of jobs. And during the Covid-19 pandemic, more students stayed in education while the jobs market was all but frozen, leading to a pent-up supply of recent graduates on the jobs market.may be structural.
Since 2013, as factories have moved to countries with cheaper labour, the number of people employed in manufacturing has been in decline. That has led to an “era of polarisation”, according to a study published by economists at Stanford and Wenzhou universities, in which wages have risen for high-skilled professionals, while the surplus of workers at the low-skilled end of the economy has driven down wages.
As a result, local governments are forced to rely on non-tax sources of revenue, such as land sales. Between 2012 and 2021, the share of local government revenues that came from land sales increased from 20% to 30%. But in 2020, armed with the mantra that “houses are for living in, not for speculation”, the government unleashed a wave of regulatory shocks to the real estate sector, prompting a record number of defaults and the worst slump in the housing market in the 21st century. That was bad news for local governments, which saw their land sale revenues fall by nearly a quarter in 2022.
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