Feel Better...Chinese College Grads Can't Get Jobs Either

While China faces the worst economic downturn in 20 years, college graduates are having a difficult time finding employment. As more and more graduates enter "the real world" they are finding more competition, "Up to one-third of last year's 5.6 million university graduates are still looking for work, and this year will see another 6.1 million hit the labor market." As China required their state-run universities to increase their enrollment rates they had planned on the increase in tuition to pay for the expansion of campuses across the country.

These plans had drastically overestimated the amount of new funding universities would receive. This is very similar to the credit bubble which occurred in the United States when lending companies severely overestimated the values of homes thus resulting in consumers receiving more money than they could afford to repay. Universities were essentially giving out degrees to very under qualified students who had not been given the resources or instruction necessary to earn a degree in their respective fields. In comparison, US lending institutions rarely executed the research necessary to ensure that their clients had the required job stability or income to reliably back up their loan.



The majority of the university debt problem stems from the 2,100 average universities which have also been state funded. They have been defaulting on their loans totaling $1.2 billion in debts. Local governments have had to require banks to restructure the terms of repayment for the universities to ensure that they do not collapse. The 75 elite universities throughout China (relatively comparable to Ivy League) have maintained adequate funding from the state to ensure sound operations.

As though the exponential increase in enrollment was not enough for China's universities to deal with; many corrupt university administrators used the state funding to improve and expand their educational efforts for economic gain. After an investigation of several universities it was found that funds were used to purchase a golf course and adorn the school with lavish statues.

This wide-spread problem exemplifies the problems that China faces on a regular basis with any governmental project. Corruption and poor state planning have be laden such ambitious efforts which may have had potential to improve the economic status and direction of China. With such impediments it will become more difficult for citizens to stabilize and expand the middle class; a necessary requirement for a successful nation.