The Chinese government is offering to help young entrepreneurs and start-ups to employ fresh graduates walking out of universities. It is estimated that 10.76 million graduates will enter the labour market this year. China’s high growth years seems to have ended. With the slackening of the economy rises the problem of creating enough new jobs, especially those with college degrees. The National Development and Reform Commission (NDRC), China’s top economic planning agency, said that government will help young entrepreneurs to set up new businesses as that would have a multiplier effect in creating more jobs. It is intended to encourage students to set up enterprises through government-funded incubators, loans with reduced interest rates, and allow the students to retain school credits as they take time off to set up businesses. It is estimated that 4.37 million small Chinese businesses shut down due to the impact of Covid-19, three times the number of new enterprises. About 80 per cent of jobs in China are in the small and medium-sized enterprises, and problems in this sector would dent the national economy as a whole.

Despite its growth and jobs problem, China remains the second largest economy in the world, next only to the United States. And it is looking for ways to deal with the challenges arising from a pandemic-hit economy. The state is not in a position to generate jobs, and depends on the smaller enterprises to create the required jobs. One of the demands made on this sector is to create jobs for college graduates. It is no more a question of an unskilled workforce engaged in infrastructure projects like building roads and urban apartment complexes. The Chinese economy has to gear itself to create jobs for its educated and skilled workforce, and this is going to be a huge challenge.

China’s communist party controls the levers of the state and not the levers of the economy. The economy operates on the principle of the market. That forces the entrepreneurs to look for innovative methods to create opportunities for the graduates. In countries like the United States, the people who do not have the jobs are those without technological qualifications. America and many others are looking to recruit skilled and qualified workers. That is why, immigration is seen as an economic factor, and the immigrants who are flocking to America are the qualified ones. In China, the reverse seems to be true. The government is forced to innovate and change so that it can employ the educated. The economy has to catch up with its educated workforce.

This phenomenon has been witnessed in the Chinese economy earlier too. For example, through the 1990s, the Chinese built apartment blocks in all the urban areas, and there was a time when there was excess accommodation in the country. The economy in China does not grow because there is demand for certain things but because there is a skilled workforce which is there to provide the services. That is why, China, after 45 years of economic reforms, is struggling with supply side issues. It has a surplus of workers who are graduates. The government wants to find jobs for the graduates, and it implies that the jobs have to be match the skills of the graduates. It would mean that China will have to step up the quality of its exports because it has graduates who can produce the sophisticated products. The world has absorbed low-priced goods produced in China by an unskilled workforce with low wages. The nature of the game has changed. It is going to be a case where Chinese graduates will produce goods and services which reflect their upgraded work skills. The world faces a different kind of competition from Chinese exports this time round.