China economic meltdown as youth unemployment soars and household wealth plummets

Xi Jinping is facing a growing economic crisis (Image: Getty)

China's economy is reeling from a double whammy of high youth unemployment and plunging household wealth.

After a sustained period of rapid progress that saw growth rates average 10% over 30 years, China's economy has hit the buffers during recent times.

The economy has been struggling and stalling in major sectors, including real estate and manufacturing.

In particular, the more difficult economic times have taken a heavy toll on youth employment, leaving millions out of work.

Unemployment among young people had been nudging towards 20% before Chinese officials changed the way the figure was calculated.

China's graduates are applying for jobs for which they are overqualified (Image: Getty)

In an attempt to put a better spin on the figures, China's National Bureau of Statistics decided to exclude students.

While youth unemployment still reached 18.8% in August, December's figure shows the rate dropping to 15.7%.

This is still about three times the overall unemployment rate in China (5.1%) and reflects the quandary facing young people in the country.

In particular, Chinese university graduates are having to take jobs for which they are overqualified.

Professor Zhang Jun, a lecturer at the City University of Hong Kong, told the BBC: "The job situation is really, really challenging in mainland China, so I think a lot of young people have to really readjust their expectations."

At the same time, household wealth in China is being seriously impacted by the continent's crisis in real estate.

Experts say that the household balance sheet is critically important to the health of China's economy.

Economic reforms over the past several decades have led to immense wealth creation for Chinese households, particularly in the form of real estate.

This new wealth has bolstered demand and raised living standards. However, real estate prices have plunged from their peak, down by 30%.

Already, the crash has destroyed $18 trillion (£14trillion) of household wealth, in a major blow for the economy.

Commenting on the latest data, Kyrylo Shevchenko, a former head of Ukraine's National Bank, said: "China’s economic miracle is unraveling. Youth unemployment nears 20%, leaving millions without work.

"70% of household wealth is tied to real estate, now in freefall. The population shrank for the third straight year, accelerating a demographic time bomb.

"Foreign investment is vanishing. Even the middle class is trying to move money abroad. The future Beijing once promised? It’s slipping further out of reach."