China Economy

China's cautious new graduates flock to state-backed jobs

Key Points
  • The class of 2021 faces pressure from high housing costs, international travel restrictions and an intensely competitive environment.
  • Chinese recruitment site Zhaopin found that 42.5% of graduating students said state-owned enterprises were their top choice for a job – up from 36% last year.
  • Many graduates are also pursuing higher degrees, students told CNBC.
  • International businesses and students see different opportunities in China.
University graduates attend a job fair at the Shandong University of Science and Technology on March 20, 2021 in Qingdao, China.
Zhang Jingang | Visual China Group | Getty Images

BEIJJNG – Despite China's quick recovery from the pandemic, many local graduates are choosing state-backed jobs, or postponing their entry into the workforce.

China was the only major economy to grow in 2020. But more than one year since the pandemic began, the class of 2021 still faces pressure from high housing costs, international travel restrictions and an intensely competitive environment.

In the last month, CNBC spoke with more than ten local and international students of mainland China-based higher education programs. Many of the sources requested anonymity so their names would not be associated with a foreign news organization. While these anecdotes don't equate qualitative research, they reflect general employment trends for what is expected to be a record 9.09 million graduates in China this year.

One 24-year-old who requested anonymity said she took an offer from a major bank in Beijing for job security. After the pandemic, companies that were too small or privately run didn't seem as stable as state-owned ones, she said.

One year after first Covid warning: Here's where China stands now
One year after first Covid warning: Here's where China stands now

Many women in her graduating class also preferred jobs at state-owned enterprises, she said, noting male classmates tended to take jobs at technology companies, where the pay is higher but the hours far longer.

The trend is nationwide. Chinese recruitment site Zhaopin found that 42.5% of graduating students said state-owned enterprises were their top choice for a job – up from 36% last year.

In contrast, the percentage choosing the private sector fell to 19% from 25.1%. Students were less inclined to enter the workforce overall – the study found an 18.9 percentage point drop in graduates taking traditional jobs. Instead, more decided to freelance, take a gap year or pursue higher academic degrees.

"By the time I started thinking about work, the pandemic was already very severe," said a master's degree student at Beijing's Communication University of China who requested anonymity. That's according to a CNBC translation of the Mandarin-language interview.

The 28-year-old spent the pandemic at his home in the northern province of Heilongjiang studying, and then took an exam for doctorate studies. "It's not that easy to get a job this year," he said, although he is confident solutions will emerge for whatever issues he might face.

As a result of greater interest in higher education programs, competition among test takers is rising. A record high 3.77 million people took the master's degree exam in December, according to state media.

The number of test takers for civil service positions also rose last year, to 1.57 million people. They competed for 25,700 jobs.

Coronavirus pandemic takes a toll on Chinese labor market
Coronavirus pandemic takes a toll on Chinese labor market

Another Communication University student, Qu Zhiyuan, 25, said her high school and middle school classmates back home in the eastern province of Shandong are having a harder time finding jobs. Even for low-level government jobs, she said there are complaints of competition from Chinese returning from studying overseas.

"I feel like I'm the most different," Qu said in Mandarin, according to a CNBC translation. While most of her classmates are taking exams for civil service or state-owned enterprise positions, or going into finance, she said she is taking a job with a movie producer and distributor in Beijing.

Rather than worrying about her own future – whether it takes her to France or the U.S. – she's worried about how capital can manipulate people. "Big data can calculate when (the audience) will cry," she said.

If graduates do pursue jobs, pay is generally lower than it was in 2019, according to Zhaopin. More than 40% of students expect a monthly salary between 4,000 and 6,000 yuan ($625 to $937.50), the report said, noting the higher-paying tech industry was by far the most sought after.

A 26-year-old music studies graduate, who requested anonymity, grew up in the mid-western province of Gansu and is looking at the region around the coastal metropolis of Shanghai for a job in the tech industry – which he figures will pay well enough to support his plans to study abroad.  

He's open to staying overseas for the long term, and hopes to get married after his job situation stabilizes. His longtime girlfriend intends to go to Europe later this year, he said.

Many mainland Chinese students have put their study abroad plans on hold, if not indefinitely, due to the pandemic and geopolitical tensions.

Covid and visa restrictions are greater challenges for going abroad than rejection by schools, said Xie Hangjian, 22. He said about half his friends intend to pursue master's degrees abroad.

Xie graduated from NYU's joint venture in Shanghai and has a job lined up with a major U.S. investment bank in the city.

"Despite Covid and the worsening geopolitical situation, some of the biggest multinational companies still hire a lot of fresh graduates, especially in mainland China," he said, pointing to the economic recovery.

Opportunities for foreign students

International students remained interested in China, with a record of more than 16,000 foreign applicants for NYU Shanghai's 500 undergraduate spots this fall. A one-year master's program in Beijing launched by Blackstone founder Steve Schwarzman received 3,600 applicants for the fall, down from 4,700 the prior year.

Despite not being able to enter China due to virus-related visa restrictions, Schwarzman Scholar and New Zealand resident Nina Jeffs, 23, said she was able to intern remotely in the past year at a start-up, where she learned about Chinese workplace culture and sustainable aviation fuels.

"It's easy to forget that China is just a huge, very diverse country and I think that's something I got a lot more insight into this year," she said.

Post-graduation, Jeffs will be working with a think tank to research climate change policy that supports greater gender equality, a subject she began exploring during the master's program. She hopes to visit China for some of that research.

For foreign students able to enter and stay in China, many remain excited about local growth.

Despite lower compensation than options in the U.S. or Europe, John Dopp, 22, plans to stay in China, where he landed a job with the overseas marketing team of a Chinese video game company. Dopp, an American, graduated with a finance degree from NYU Shanghai.

"I'm really excited to start my career here just because it feels like there's so much opportunity," he said, noting many Chinese companies are looking for foreigners to help their businesses expand abroad.