Is AI displacing entry-level jobs in China? - Asia Specific podcast, BBC World Service

Almost 13 million graduates in China are about to join the labour market. over the summer as they finish their university studies. But Chen Yan, there aren't that many jobs available for them, are there? Yes Mariko, and it has been bad for a while. Just as AI is threatening to take more entry level jobs. So today we're asking, what can China's government do. to make sure there are enough jobs for young people?

I'm Mariko in Singapore and this is Asia Specific from the BBC World Service. Twice a week we bring you Asia Pacific stories. unpacked by those who know them best. And I have Chen Yan from the BBC's Chinese language service. Welcome to Asia Specific, Yan. Great to be here. Thank you for inviting. And I also have Professor Kailing Shen from Australian National University. Thank you so much for coming on the pod. Yeah, I'm glad to join. So firstly Yan, let's start by painting the picture.

Because this youth unemployment issue. It's not new, is it? I remember the authorities suspending the release of data. because it was so bad for quite some time, I think about three years ago. So in comparison, how bad is the situation? Has it gotten worse compared to, say, three years ago? Yes, you're right, the reason is because three years ago, the Chinese government was so sensitive about this data. because it was so bad at that time. And the main reason at that time is because.

after Covid-19, the economic growth is not recovering as expected. So slower economy means fewer jobs will be created. And for the past several years, the demographic factor plays in this crisis. Because every year the college graduates hits a new record high. This year it's another record high of 12.7 million college graduates,

which is creates a lot of extra tension for the market to absorb. And also the Chinese economy is still slowing down. And this year, the Chinese government has set the GDP growth rate. at 4.5 to 5% as a target, which is relatively high compared to other countries, but in Chinese standard it's quite low. And I think the late Premier Li Keqiang in China has famously said that.

in the Chinese context, 1% of GDP growth roughly creates two million new jobs. So 4.5 to 5% GDP growth translate to roughly nine to ten million new jobs, but the college graduates is 12.7 million. So you see the gap over there. The gap itself creates a lot of tension,

a lot of sentimental issues for the young people in China. Yan, if you can just explain, how does it work? Because, you know, we keep hearing about how China's population is shrinking. So how's the number of newly grads, university grads keeps going up in China? Because the new elementary students that are entering elementary school, have dropped sharply because in the past few years, the Chinese population. has shrunk and the newborns have shrunk significantly.

But the newly graduates, they were born 18 years ago, 20 years ago. at that time, that was the peak of population growth. So right now, when they grow up, when they get into college 20 years later, they are creating a new peak each year, for the past several years. But you can imagine like 15 years later, the Chinese will face a labor crisis. You've been looking at the Chinese economy.

and the jobs market for some 20 years. So how bad is the situation? Yan talked about how obviously the Covid-19 pandemic affected the labor market. and the economy hasn't recovered. But in comparison, for, you know, the duration that you've been looking at, the Chinese market has the situation. Youth unemployment situation been this bad, in your view? I don't think the current situation is as bad. or is considered as bad as during the global financial crisis.

That's 2008,2009. I vividly remember when I was still stationed in China. and how people felt very astonished because that is a situation. with great contrast. I remember in October 2008, the CCTV is still thinking.

how can we can control the speed of the economic boom. But then suddenly, over a month, then the whole thing flipped. So that is a very big shock. But currently in China, I think there is a different flavor, especially currently with all the EV and other industries, the whole momentum, the country basically.

has that certain level of confidence, especially the young people. No one considering this is solvable in two years. and no one is thinking this is only about China, because we see in many countries with the transition brought about or, predicted by all the big AI companies, most young people around the world are worried about their future. Yeah, absolutely.

The AI shock is definitely not just a China specific thing. You mentioned CCTV, which is a state broadcaster of China, and you were just talking about during the global financial crisis. Would you say the frustration level. because you said you were still in China at the time, was there quite a lot of frustration among young people. not being able to find work or because it was such a global issue? Were people kind of more okay with it? No one from the government to ordinary people have any idea.

about how long this will last or whether this will be resolved eventually. So very desperate, pessimistic. I would say at that point, but now with this, we have experienced the full cycle. I guess people are a little bit more resilient and there will be. people who think this is just a phase that eventually will pick up somehow. So I still remember my years during the financial crisis,

I graduated 2012, which is when the Chinese economy just recovered. from the financial crisis shock. And at that year the economy was quite good. We had fewer college graduates and higher GDP growth rate. when I graduated. Right now, the students nowadays are facing twice more newly graduates, but much lower GDP growth rate. So the pressure is over there very obviously created over there.

So the students nowadays, when they graduate, they see their older cousins, they see their parents. They will realize that they can land a job. during their days quite easily compared to what they are facing. I actually feel very shocked by the magnitude of the government. dumping money to the economy, which is in 2009, 2010. on really big scale projects and the dumping of money,

just as if the whole economy is going under and we are going to save it, otherwise we're all going die. Like that kind of momentum. And kind of when we reflect back nowadays, there is a certain reflection saying maybe we have overshot. We could have handled that with lesser dumping of money.

because that has its negative consequences later on, as the real estate market was really booming up and became so hot. Yan, you spoke to a lot of young people as part of your reporting. How do they feel about it? I remember there was that concept of lying flat, but I was reading. how that became from kind of a niche subculture to now part of mainstream. So how do those unemployed young people feel these days?

Yeah, the one guy I talked to who is a PhD graduate. He landed a job in a state owned enterprise. in Shanghai, which is a pharmaceutical research company. And he said that there's a great opportunity. finding him and not him seeking the opportunity. And the need is over there is real because the I think. there's a policy push behind it. The state owned companies have to hire more in this harsh job.

environment because the government wants those, state owned companies to stabilise the job market. But on the other hand, some newly graduates are quite frustrated. I talked to a young girl who is in Shanghai right now, who used to study in Xiamen Province, Xiamen University. And she told me that she is struggling. to even find an internship, which is a transition period to a real job,

and she sends like two hundred resumes to different kind of companies. But she couldn't get one in the advertisement. industry, and she relies on her family to provide for her, for rent and groceries. Yeah, that would be a very frustrating, difficult. situation, wouldn't it? Kailing, you mentioned the AI shock affecting not just China,

but the entire world where the technology may be replacing. the entire entry-level jobs in many companies. Do you think China is facing this problem kind of differently from. the rest of the world because of such a high adoption rate of the technology? From the technical side, I think there's not much difference. for companies worldwide, but in terms of how they react, I think the Chinese economy is very flexible.

What we observe, for example, during the global financial crisis, is companies originally was targeting to hire a four year graduates. Now they are hiring three year college graduates. So they are very flexible. Whatever makes them make profit, that's what they are going to do. On the other side, the flexibility of the Chinese labor market. means you do see people transiting from different positions.

One day they are manager, another day they might be a nanny. Like the market does not put a harsh penalty for people. You can jump around. and that kind of freedom is not widely seen in many other economies. You do have a baggage of where you coming from. I look at your LinkedIn or whatever, right? But in China, who cares?

So long as you can do the job, you will get it. So that's one thing a lot of. newly graduate university students do not realise. how much freedom they actually have. It's especially more difficult for newly graduates, because all the new graduates, unless they have ever made any effort, they look very similar to each other. They are all from a computer science degree, all of them have good marks.

Nothing makes them different. But after one or three years, they start to show their own branding. And that's where the matching becomes much easier. Yeah, I guess that's a, that's a really good tip for not just Chinese students, but any other newly grads who are facing a very similar issue elsewhere as well. Just wondering, though, you said the Chinese labor market is more flexible than others.

Where do you think that flexibility comes from? So for the Chinese economt, one is a state owned public sector employment. And besides that, everything else is so flexible. There are minimal rules and even sometimes there are rules. that's not implemented. It's the general momentum of most people. They do not depend on the government to provide this social safety net. The social safety net is only for the extreme populations.

And I also want to point out that, college graduates right now. who are graduating, were born in the early 2000s. And at that period of time, China is still under one child policy. And just like me and my wife, we are all in that one child family. And at the early stage of our career, even though we couldn't land a job, our family is more than happy to help us to get through the period.

That's what Kailing said about the social safety net, which I think is quite unique in China's context. Yeah. Just going back to the AI shock that Kailing talked about, you spoke to a lot of those young people who can't get a job. How do they feel about this AI shock? Because, you know, we've done an episode on whether even having a university degree. these days is even valuable. because all the entry level jobs seem to be replaced by the technology.

How do Chinese youth feel about the AI and the technology, the threat and the opportunities that it potentially poses. The PhD graduates I talked to who learned a researcher job. He said AI was barely mentioned. during his job recruiting process. I was quite surprised by that. The reason behind it because. for one, the company he goes into, is a state owned company, which is not panicking or responsive to AI shock. And the.

The other is that because he's end of job is more like research. and experiment, which is not easily replaced by AI. But on the other hand, some students, the one intern that I talked to that, when he was going into work, by the fourth day, he realized all his daily work can be replaced by AI. What he does is to run a social media account,

to copywrite, to write monthly and weekly reports. He's saying that all this work can be done by AI perfectly. And most of the time, it's better than what the intern can do. So he was quite aware of being replaced. Having the fear of being replaced. One company called Dreampark, which does advertisements, promotions etc.

And they have an office in Shanghai, in Hong Kong and in Singapore and the CEO and the founder told me. that they used to have five internships every year in Hong Kong. And this February, when OpenClaw, which is the AI agent, came about. and they implemented OpenClaw quite intensively in their workflow. so that they have four OpenClaw agents, which can perfectly replace those five interns jobs. So this summer, they don't have any interns and they don't have any plans.

to recruit any new graduates because the cost is too vast. Kailing, I'm just curious if these companies are choosing not to hire. those very junior entry level staff. now, what are they going to do, you know, in the foreseeable future. when they have to replace this mid to senior level staff? I mean, they can't exactly replace all the jobs by AI or can they? Our young people, they are the future,

not just because today they are begging for some jobs to be paid. But because what they like, what they appreciate, will demand what product. and what service will prevail in the market. Already in Chinese market, you see all the alcohol are not sold because young people don't drink, right? There's many, many things. These young people will dictate what our future will look like.

Any companies that say we don't want any young people in our company, but we still want the business. of the younger generation, that's just doesn't work. And I want to jump in on that, is that there's a concept of OPC, which is quite hot right now in Chinese social media. It's One-Person Company. So it's one founder who is dictating a dozen AI agents.

to help him realise his ideas and it can be a small business on its own. It's one man and 12 AI agents, and so if that becomes more common in the future, maybe the whole structure of a company need to be rethought and reinvented. What do you think. kailing, I mean, you know, we were recently talking about. how this unemployment situation, especially among the country's youth,

is resulting in weak consumption. People just aren't spending enough money in China. And even though the Chinese government has announced various measures, it hasn't really worked. Do you think Beijing will have to do more. to address this youth unemployment situation? Because I'm sure it is creating quite a bit of frustration. for the parents as well as the graduates. In the long run, for the young generation to be able to shift. or transform to function in this the society.

They probably need to, my suggestion is, go pick up whatever jobs now. just so that you know the context, spend some time and later on you can complement that knowledge. which is hard earned with your AI skills. That's where your unique branding comes from. That's a really good advice for all the young students,

not just in China, but around the world. Thank you so much for joining me, Kailing and Yan. Thank you. You're welcome. You've been watching Asia Specific from the BBC World Service. with me, Mariko Oi, in Singapore. If you have any questions or thoughts on what we covered in this episode. or any other stories from the region, please leave us a comment below. You can also get in touch with us on email asiaspecific@bbc.co.uk. and click like and subscribe so you never miss an episode.

See you next time. Bye bye. Bye bye.