Cherry's situation changed dramatically this summer. Just as Cherry was about to graduate from university this year and start her job, she was told by the company that her offer has been rescinded as it had to "adjust" its business and cut staff.

Her peers received similar calls.

"I think it's because of the pandemic," the 22-year-old said. "Most companies have been affected by Covid lockdowns this year."

She asked to only be referred to as Cherry, for fear of reprisals from future employers.

A sweeping crackdown by Beijing on the country's private sector, that began in late 2020, and its unwavering commitment to a zero-Covid policy, have hit the economy and job market hard.

"Us fresh graduates are definitely the first batch of people to be laid off, because we just joined the company and haven't made much contribution," Cherry said.

A record 10.76 million college graduates entered the job market this year, at a time when China's economy is losing the ability to absorb them.

The youth unemployment rate has repeatedly hit new highs this year, rising from 15.3% in March to a record 18.2% in April.

It continued to climb for the next few months, reaching 19.9% in July.

The rate fell slightly to 18.7% in August, but still remains among the highest ever, data from the National Bureau of Statistics showed on Friday.

That means there are currently about 20 million people aged 16 to 24 out of work in cities and towns, according to CNN calculations based on official statistics that put the urban youth population at 107 million. Rural unemployment isn't included in official data.

"This is certainly China's worst job crisis for young people" in over four decades, said Willy Lam, a senior fellow of the Jamestown Foundation in Washington D.C.

"Mass unemployment is a big challenge for the Communist Party," he said, adding that providing economic growth and job stability is key to the Party's legitimacy.

And, perhaps nowhere is the crisis more visible than in the tech sector, which has been suffering from the regulatory crackdown by the government and far-reaching US sanctions against China.

The once-freewheeling industry was long the main source of high-paid jobs for young, educated workers in China, but major companies are now downsizing at a scale not seen before.

Alibaba, the e-commerce and cloud titan, recently posted flat revenue growth for the first time since becoming a public company eight years ago.

Alibaba reduced its workforce by more than 13,000 in the first six months of this year.

This is the biggest reduction in its staffing since Alibaba was listed in New York in 2014, according to CNN calculations based on its financial documents.

Tencent, the social media and gaming giant, let go nearly 5,500 employees in the three months to June. This was the biggest contraction in its workforce in more than a decade, according to its financial records.

"The significance of these latest tech industry cuts cannot be understated," said Craig Singleton, senior China fellow at the DC-based Foundation for Defense of Democracies.

The job crisis in the tech sector, the industry Chinese leader Xi Jinping once proclaimed would drive the next phase of China's development, could undermine his ambitions of turning the country into an innovation leader and a global tech superpower in the next two to three decades.

"These latest cuts represent a dual threat for Beijing going forward — not only do thousands of people unexpectedly find themselves out of work, but now these Chinese tech giants will have fewer qualified employees to help them innovate and scale-up to take on their Western competitors," Singleton said.

"There is a saying in business circles that 'If you are not growing, you are dying,' and that simple truth threatens to undermine China's broader technological ambitions," he added.

Social instability:

Tech isn't the only sector suffering. In the past few months, mass layoffs have engulfed once booming Chinese industries ranging from private tutoring to real estate.

This could be a major problem for Xi and his government, which has characterized employment as a top policy priority.

"There are growing indications that the tenuous trust that exists between the Chinese people and the Chinese Communist Party is starting to fray, which could lead to a breakdown in social cohesion," Singleton said.

China scrambles to defuse alarm over mortgage boycotts and banks runs

China scrambles to defuse alarm over mortgage boycotts and banks runs:

The unemployment issue has come at a sensitive time for the Chinese leader, experts said. Xi is seeking a historic third term when the Communist Party hold its congress next month.

"The party congress is so close now that I don't see any significant risk that lay offs will interrupt the preparations for Xi to be nominated, and accept, a ground breaking third term of office," said George Magnus, an associate at the China Centre at Oxford University.

Original Story By | Laura He