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Meet China’s ‘Ant Tribe’

China’s economic growth may hit 9 percent this year, but Guan Jian, profiled recently by the Los Angeles Times, is not feeling the benefits of his country’s rapidly expanding economy.

Guan, 24, is a member of China’s “Ant Tribe.” Given their nickname by a recent book documenting their struggles, China’s estimated 3 million “ants” are young adults who have college degrees but remain unemployed or underemployed. Guan and his cohorts live in cramped quarters on the fringes of the capital and other major cities, cooking on hot plates and using communal bathrooms. Some lack heat and hot water.

Facing a lack of educated workers, in 1996 China began expanding university enrollment, giving more students access to the education required for professional jobs. In 1999 the country committed to increasing undergraduate enrollment by 30 percent each year. As a result, enrollment quintupled between 1999 and 2008. Last year about 6.1 million students were handed diplomas.

But after graduation day, reality hits. As the government amped up enrollment, it did little to ensure that the graduates would find suitable jobs waiting for them. Guan, who studied broadcast journalism, applied for a job at a television station after he graduated. Thousands of others also applied for the same two slots. While Guan made it to the final six, he was not offered a job.

Even those graduates who succeed in finding employment must accept severely depressed salaries. Reuters recently reported that, according to some workers, companies in Beijing and other large cities have cut monthly salaries for professional positions by 50 to 100 percent as a result of the labor surplus, which would mean some workers are taking unpaid internships rather than paying jobs. Many young graduates earn as little as 2,000 yuan - less than $300 - a month, the news agency reported.

While China’s strong overall economic statistics obscure the plight of this segment of the population, the problems of the “ants” represent a serious obstacle to the country’s push forward. China is building its economy on the foundation of its exports, at the expense of developing its domestic demand. The country sells a lot, but does not consume a lot. In 2008, trade accounted for 57 percent of China’s gross domestic product.

This focus on producing goods for export means there are many jobs in manufacturing, but few opportunities for the college educated, who are more likely to work in service-related jobs. This problem is self-perpetuating. Those who have the education to become part of the middle class are unable to find jobs that would allow them to contribute to domestic demand by buying the things middle-class consumers want to have.

By encouraging domestic demand, China can give its graduates the opportunity to achieve their full potential while they engage in work that delivers a higher standard of living to the whole country. China’s new graduates have the education, skills and ambition that can further China’s progress, but only if they are given the opportunity to use their talents.

If China does not act to solve the graduate unemployment problem, social unrest may take root among the overeducated and underemployed. Lian Si, a sociologist who spent two years researching the graduates, said, “They represent the pain and confusion of a whole generation. When all their anger and grievances reach a critical point, a special event could trigger a large-scale mass movement.”

Guan, however, seems resigned rather than angry about his difficult circumstances. Speaking of his room in a prefabricated metal structure attached to his landlord’s roof, the young would-be broadcaster said that, while it is “inconvenient” that his quarters don’t include a bathroom, “Chinese people are used to small spaces. My friends say my room is cozy.”

After many months of short-term stints and joblessness, Guan finally got a call from a state television channel. The channel could only offer an internship, paying just a few hundred dollars a month, but Guan said, “I'll have to see if I can make it work.”

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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