Published: 11:34 AM, 08 March 2025
Chinese job market in crisis amid mass layoffs and high unemployment rate
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The serious problem of unemployment in China has worsened as several companies including multinationals (MNCs) have started reducing their workforce by a significant share. Mercedes-Benz, Nokia, and HSBC are some of the major names.
Mercedes-Benz has announced the decision to lay off 25 percent of its employees in China by 2027 to improve operational efficiency and market competitiveness. The profits fell by 20.3 percent in 2024 year-on-year. Even the latest quarter showed about 18 percent decline in profits compared to that in the previous year.
However, the tariffs by the Trump government appears to be the major driver. CEO Ola Källenius said the company "feels American" and wants to "grow their footprint in the US.” As the Mercedes-Benz is seeking to localize more production in the US to avoid any geopolitical risks, its output in China is likely to reduce. This will lead to cost cutting in China.
The layoffs by Mercedes-Benz is part of a wider trend, aggravating the unemployment crisis, and it could force Chinese government to protect employments, said Mackenzie Ferguso, CEO of the AI research firm Opentools. “Socially, these layoffs could potentially lead to unrest should displaced workers find difficulty securing alternative employment,” he said.
As Apple has been gradually shifting its production to India and Vietnam, its vendor Foxconn has been forced to close some of its factories across China. This has led to mass layoffs and resignations in China. In case the Taiwanese vendor exits its operations in China, the closure of 40 factories in China will aggravate unemployment.
HSBC recently gave pink slips to 900 of its employees in China. Last year, Nokia cut 2000 jobs in China while just 340 positions in Europe. Tesla also laid off its employees in China in 2024. Local giants such as Alibaba and Tencent have followed suit. Alibaba slashed its workforce by 20,000 employees in 2023, continuing the cost-cutting in 2024 as well. Tech giant Tencent also downsized its workforce by a significant amount.
IBM which has shipped its first machine to China in 1934 and set up its first business there in 1992 is downsizing its business. While Chinese market ceased to remain a bright spot now, experts hinted at the geopolitical and security risks for the decision.
Anne Stevenson-Yang, co-founder and managing principal at J Capital Research, said many US firms went to China due to Chinese incentives and bureaucratic urging. “This was a key brag of the Chinese government for a long time. Now, political risk and IP [intellectual property] risk are reversing that trend,” she said.
Shenzhen-based Qiao Feng Technology tried to relocate secretly amid fund crunch but it was prevented by the workers. According to the China Labour Bulletin, the local factories were affected after multinational companies halted production or cut jobs. “Given the trend of diversifying production away from China, the manufacturing industries have been getting affected gradually,” it said.
Not just private firms but government also is trying to reduce the workforce due to the economic slowdown in China, said Ding Shuang, chief economist for Greater China with Standard Chartered. “With low profit margins amid a sluggish economy, private companies are understandably adopting workforce reductions,” he said. “State-owned enterprises, on the other hand, may resort to payroll adjustments to save money.”
The job reduction has become a major concerns especially when the unemployment rate in China is very high. The youth unemployment had reached 21.3 percent in mid 2023. It remains high even today—16.1 percent in December 2024. In 2025, 12.22 million college students are expected to graduate. This will create more problems, especially, when private firms are cutting jobs.
The young people said they were living in the “garbage time” of China’s history as they fail to get job despite higher education. Highlighting the magnitude of unemployment in China, Beijing-based start-up founder Zuyi Lee said he received 142 applications for a part-time job in 24 hours. “It’s clear that many are in urgent need of employment,” he said.
The rising unemployment and low supply of jobs in the market has led to frustration and anger among Chinese people. Liu Fei, a grass roots community worker, said people were tensed and those unemployed were in depression and anger. “When the economy is in downturn, people become more aggressive, and conflicts between strangers increase. I remind my family daily not to argue with strangers,” she said
Written by: Md. Sajib Biswas (Journalist) [The views and opinions expressed in this article are those of the author’s personal.]
Mercedes-Benz has announced the decision to lay off 25 percent of its employees in China by 2027 to improve operational efficiency and market competitiveness. The profits fell by 20.3 percent in 2024 year-on-year. Even the latest quarter showed about 18 percent decline in profits compared to that in the previous year.
However, the tariffs by the Trump government appears to be the major driver. CEO Ola Källenius said the company "feels American" and wants to "grow their footprint in the US.” As the Mercedes-Benz is seeking to localize more production in the US to avoid any geopolitical risks, its output in China is likely to reduce. This will lead to cost cutting in China.
The layoffs by Mercedes-Benz is part of a wider trend, aggravating the unemployment crisis, and it could force Chinese government to protect employments, said Mackenzie Ferguso, CEO of the AI research firm Opentools. “Socially, these layoffs could potentially lead to unrest should displaced workers find difficulty securing alternative employment,” he said.
As Apple has been gradually shifting its production to India and Vietnam, its vendor Foxconn has been forced to close some of its factories across China. This has led to mass layoffs and resignations in China. In case the Taiwanese vendor exits its operations in China, the closure of 40 factories in China will aggravate unemployment.
HSBC recently gave pink slips to 900 of its employees in China. Last year, Nokia cut 2000 jobs in China while just 340 positions in Europe. Tesla also laid off its employees in China in 2024. Local giants such as Alibaba and Tencent have followed suit. Alibaba slashed its workforce by 20,000 employees in 2023, continuing the cost-cutting in 2024 as well. Tech giant Tencent also downsized its workforce by a significant amount.
IBM which has shipped its first machine to China in 1934 and set up its first business there in 1992 is downsizing its business. While Chinese market ceased to remain a bright spot now, experts hinted at the geopolitical and security risks for the decision.
Anne Stevenson-Yang, co-founder and managing principal at J Capital Research, said many US firms went to China due to Chinese incentives and bureaucratic urging. “This was a key brag of the Chinese government for a long time. Now, political risk and IP [intellectual property] risk are reversing that trend,” she said.
Shenzhen-based Qiao Feng Technology tried to relocate secretly amid fund crunch but it was prevented by the workers. According to the China Labour Bulletin, the local factories were affected after multinational companies halted production or cut jobs. “Given the trend of diversifying production away from China, the manufacturing industries have been getting affected gradually,” it said.
Not just private firms but government also is trying to reduce the workforce due to the economic slowdown in China, said Ding Shuang, chief economist for Greater China with Standard Chartered. “With low profit margins amid a sluggish economy, private companies are understandably adopting workforce reductions,” he said. “State-owned enterprises, on the other hand, may resort to payroll adjustments to save money.”
The job reduction has become a major concerns especially when the unemployment rate in China is very high. The youth unemployment had reached 21.3 percent in mid 2023. It remains high even today—16.1 percent in December 2024. In 2025, 12.22 million college students are expected to graduate. This will create more problems, especially, when private firms are cutting jobs.
The young people said they were living in the “garbage time” of China’s history as they fail to get job despite higher education. Highlighting the magnitude of unemployment in China, Beijing-based start-up founder Zuyi Lee said he received 142 applications for a part-time job in 24 hours. “It’s clear that many are in urgent need of employment,” he said.
The rising unemployment and low supply of jobs in the market has led to frustration and anger among Chinese people. Liu Fei, a grass roots community worker, said people were tensed and those unemployed were in depression and anger. “When the economy is in downturn, people become more aggressive, and conflicts between strangers increase. I remind my family daily not to argue with strangers,” she said
Written by: Md. Sajib Biswas (Journalist) [The views and opinions expressed in this article are those of the author’s personal.]
