China

China's Internet Giants Order $5 Billion of Nvidia Chips To Power AI Ambitions 31

According to the Financial Times, China's internet giants have ordered more than $5 billion worth of high-performance Nvidia chips for building generative AI systems. Reuters reports: Baidu, TikTok-owner ByteDance, Tencent and Alibaba have made orders worth $1 billion to acquire about 100,000 A800 processors from the U.S. chipmaker to be delivered this year, the FT reported, citing multiple people familiar with the matter. The Chinese groups had also purchased a further $4 billion worth of graphics processing units to be delivered in 2024, according to the report.

The Biden administration last October issued a sweeping set of rules designed to freeze China's semiconductor industry in place while the U.S. pours billions of dollars in subsidies into its chip industry. Nvidia offers the A800 processor in China to meet export control rules after U.S. officials asked the company to stop exporting its two top computing chips to the country for AI-related work. Nvidia's finance chief said in June that restrictions on exports of AI chips to China "would result in a permanent loss of opportunities for the U.S. industry", though the company expected no immediate material impact.
China

Biden Issues an Executive Order Restricting US Investments In Chinese Technology (apnews.com) 59

An anonymous reader quotes a report from the Associated Press: President Joe Biden signed an executive order Wednesday to block and regulate high-tech U.S.-based investments going toward China -- a move the administration said was targeted but it also reflected an intensifying competition between the world's two biggest powers. The order covers advanced computer chips, micro electronics, quantum information technologies and artificial intelligence. Senior administration officials said that the effort stemmed from national security goals rather than economic interests, and that the categories it covered were intentionally narrow in scope. The order seeks to blunt China's ability to use U.S. investments in its technology companies to upgrade its military while also preserving broader levels of trade that are vital for both nations' economies.

The officials previewing the order said that China has exploited U.S. investments to support the development of weapons and modernize its military. The new limits were tailored not to disrupt China's economy, but they would complement the export controls on advanced computer chips from last year that led to pushback by Chinese officials. The Treasury Department, which would monitor the investments, will announce a proposed rulemaking with definitions that would conform to the presidential order and go through a public comment process. The goals of the order would be to have investors notify the U.S. government about certain types of transactions with China as well as to place prohibitions on some investments. Officials said the order is focused on areas such as private equity, venture capital and joint partnerships in which the investments could possibly give countries of concern such as China additional knowledge and military capabilities.
The Chinese Ministry of Commerce responded in a statement early Thursday that it has "serious concern" about the order and "reserves the right to take measures."

"We hope the U.S. side respects the laws of the market economy and the principle of fair competition, does not artificially obstruct global economic and trade exchanges and cooperation and does not put up obstacles for the recovery and growth of the world economy."

The Chinese Ministry of Commerce also said the executive order "seriously deviates from the market economy and fair competition principles the United States has always advocated. It affects the normal business decisions of enterprises, disrupts the international economic and trade order and seriously disrupts the security of global industrial and supply chains."
China

China Universities Waste Millions, Fail To Make Real Use of Research, Audit Finds in Indictment of Tech-Sufficiency Drive (scmp.com) 27

Universities in a southern Chinese region are not doing enough to turn academic research into market applications, and in maintaining large piles of idle funds, and the findings could raise questions about the nation's ambitious tech self-sufficiency drive. SCMP: According to a new audit report by the Guangxi Zhuang autonomous region for 2022, nine universities in the region had extremely low conversion rates in bringing inventions to the market -- below 1 per cent -- from 2020 to 2022. Among them, one university saw no successful industrial applications out of 862 implemented research projects funded with a total of 131 million yuan (US$18.2 million). The findings spotlight a long-standing weak link in China's push to strengthen basic research, which it views as crucial to becoming a tech superpower by the middle of the century, and to breaking free US tech-containment measures. "Essentially, this reflects a nationwide issue," said Liu Ruiming, a professor with the National Development and Strategic Research Institute at Renmin University.
United States

US Reports Big Interest in $52 Billion Semiconductor Chips Funding (reuters.com) 26

The U.S. Commerce Department said on Wednesday that more than 460 companies have expressed interested in winning government semiconductor subsidy funding in a bid to boost the country's competitiveness with China's science and technology efforts. From a report: The White House is marking the one-year anniversary on Wednesday of President Joe Biden's signing of the landmark "Chips for America" legislation providing $52.7 billion in subsidies for U.S. semiconductor production, research and workforce development. Biden said in a statement that companies have announced $166 billion in semiconductors and electronics manufacturing over the last year, adding the law will "make America once again a leader in semiconductor manufacturing and less dependent on other countries for our electronics or clean energy supply chains."

The Commerce Department began accepting applications in June for the $39-billion subsidy program for U.S. semiconductor manufacturing as well as equipment and materials for making chips but has not yet issued awards. "We're finally making the investments that are long overdue to secure our economic and national security," Commerce Secretary Gina Raimondo told reporters. "We need to move quickly but it's more important we get it right."

China

China To Require All Apps To Share Business Details in New Oversight Push (reuters.com) 17

China will require all mobile app providers in the country to file business details with the government, its information ministry said, marking Beijing's latest effort to keep the industry on a tight leash. From a report: The Ministry of Industry and Information Technology (MIIT) said late on Tuesday that apps without proper filings will be punished after the grace period that will end in March next year, a move that experts say would potentially restrict the number of apps and hit small developers hard. You Yunting, a lawyer with Shanghai-based DeBund Law Offices, said the order is effectively requiring approvals from the ministry. The new rule is primarily aimed at combating online fraud but it will impact on all apps in China, he said.

Rich Bishop, co-founder of app publishing firm AppInChina, said the new rule is also likely to affect foreign-based developers which have been able to publish their apps easily through Apple's App Store without showing any documentation to the Chinese government. Bishop said that in order to comply with the new rules, app developers now must either have a company in China or work with a local publisher.

Businesses

Germany Spends Big To Win $11 Billion TSMC Chip Plant (reuters.com) 35

TSMC is committing $3.8 billion to establish its first European factory in Germany, benefiting from significant state support for the $11 billion project as Europe aims to shorten supply chains. Reuters reports: The plant, which will be TSMC's third outside of traditional manufacturing bases Taiwan and China, is central to Berlin's ambition to foster the domestic semiconductor industry its car industry will need to remain globally competitive. Germany, which has been courting the world's largest contract chipmaker since 2021, will contribute up to 5 billion euros to the factory in Dresden, capital of the eastern state of Saxony, German officials said.

"Germany is now probably becoming the major location for semiconductor production in Europe," German Chancellor Olaf Scholz said, less than two months after Intel announced a 30 billion euro plan to build two chip-making plants in the country. "That is important for the resilience of production structures around the world, but it is also important for the future viability of our European continent, and it is of course particularly important for the future viability of Germany."

TSMC said it would invest up to 3.499 billion euros into a subsidiary, European Semiconductor Manufacturing Company (ESMC), of which it will own 70%. Germany's Bosch and Infineon and the Netherlands' NXP (NXPI.O) will each own 10% of the plant, which will make up to 40,000 wafers a month for cars and industrial and home products when it opens in 2017. The factory will cost around 10 billion euros in total.

Hardware

Amazon Has More Than Half of All Arm Server CPUs in the World (theregister.com) 19

Amazon is the most successful manufacturer of Arm server chips, accounting for just over half of Arm-based server CPUs currently deployed, while some chipmakers are also now betting on Arm-based Windows PCs. From a report: This information comes from a report issued by Bernstein Research which estimates that nearly 10 percent of servers across the world contain Arm processors, and 40 percent of those are located in China, as we reported earlier. But that total is beaten by just one company -- Amazon -- which has slightly above 50 percent of all Arm server CPUs in the world deployed in its Amazon Web Services (AWS) datacenters, said the analyst.

Amazon currently uses its own Graviton family of chips, designed by the Annapurna Labs division of Amazon Web Services and introduced to the world back in 2018, which are for its own internal use only. The latest iteration is the Graviton3E for high-performance computing applications, introduced towards the end of 2022. According to Bernstein, because these chips were optimized for the specific needs of AWS, the company is able to fit in more cores per socket or per rack and the chips consume less power, translating to lower spending on space and cooling.

Medicine

Air Pollution Linked To Rise in Antibiotic Resistance That Imperils Human Health (theguardian.com) 61

Air pollution is helping to drive a rise in antibiotic resistance that poses a significant threat to human health worldwide, a global study suggests. From a report: The analysis, using data from more than 100 countries spanning nearly two decades, indicates that increased air pollution is linked with rising antibiotic resistance across every country and continent. It also suggests the link between the two has strengthened over time, with increases in air pollution levels coinciding with larger rises in antibiotic resistance.

"Our analysis presents strong evidence that increasing levels of air pollution are associated with increased risk of antibiotic resistance," researchers from China and the UK wrote. "This analysis is the first to show how air pollution affects antibiotic resistance globally." Their findings are published in the Lancet Planetary Health journal. Antibiotic resistance is one of the fastest-growing threats to global health. It can affect people of any age in any country and is already killing 1.3 million people a year, according to estimates. The main drivers are still the misuse and overuse of antibiotics, which are used to treat infections. But the study suggests the problem is being worsened by rising levels of air pollution.

The study did not look at the science of why the two might be linked. Evidence suggests that particulate matter PM2.5 can contain antibiotic-resistant bacteria and resistance genes, which may be transferred between environments and inhaled directly by humans, the authors said. Air pollution is already the single largest environmental risk to public health. Long-term exposure to air pollution is associated with chronic conditions such as heart disease, asthma and lung cancer, reducing life expectancy. Short-term exposure to high pollution levels can cause coughing, wheezing and asthma attacks, and is leading to increased hospital and GP attendances worldwide.

Moon

Chandrayaan-3: Historic India Moon Mission Sends New Photos of Lunar Surface (bbc.com) 42

Long-time Slashdot reader William Robinson shares a report from the BBC: India's space agency has released the first images of the Moon taken by the Chandrayaan-3 spacecraft, which entered lunar orbit on Saturday. The images show craters on lunar surface getting larger and larger as the spacecraft draws closer. Chandrayaan-3's lander and rover are due to reach the surface on August 23. If successful, India will be the first country to perform a controlled "soft landing" near the south pole. It will also become only the fourth to achieve a soft landing on the Moon after the US, the former Soviet Union and China.

After the spacecraft orbited the Earth for about 10 days, it was sent into the translunar orbit last Tuesday and successfully injected into the lunar orbit on Saturday. Indian Space Research Agency (Isro) said that all checks showed that Chandrayaan-3 was in good "health." It has also pointed out that "this is the third time in succession that Isro has successfully injected a spacecraft into the lunar orbit." Scientists say Chandrayaan-3, the third in India's program of lunar exploration, is expected to build on the success of its earlier Moon missions.

Hardware

Superconductor Breakthrough Claims Traced to a Basement Lab in Seoul (yahoo.com) 110

In a neighborhood in Seoul there's an ordinary red-brick, four-story building, reports Bloomberg — but there's something unique about the building's basement office. It's somehow the registered address of the Centre "whose extraordinary claims about a breakthrough in superconductor technology have shocked the scientific community and captivated the world."

Bloomberg also reports that:

- "No one responded when a Bloomberg News reporter knocked on the center's locked doors or reached out via LinkedIn."

- "Goods including bottles of sparkling water delivered to the center's address have been left untouched outside the office's entrance."

- "Multiple attempts to reach the scientists at the Quantum Energy Research Centre were not answered."

- "The center's website has also been closed and says it is 'under construction.'"

However, Kim Hyun Tak, one of the authors of the papers who is a research professor of physics at the College of William & Mary in Virginia, said the skeptical reaction is expected. "It's common practice when a new crucial discovery or invention is made public that there are more people who say that it's not credible," Kim said in a Zoom interview. "It's a natural thing for some people to laugh at it because it's the first time, and they don't even know what it is, but as time passes, they start to believe it...."

In response to questions about why the Quantum Energy Research Centre hasn't provided the materials to other scientists, Kim said that it doesn't have enough inventory of the LK-99 compound nor time to recreate it, and that the researchers have been distracted by the number of journalists trying to contact them. "You know that the office is extremely small and in a poor state." he said. "It's so small, and you need the money to make the compounds. That's why they cannot mass-produce it."

Despite the questions, he remained defiant that the research was sound. "The experimental data speaks for itself," Kim said. "We know it because we're the ones who synthesized it and conducted the studies."

"The claim has been met with widespread excitement globally," adds Bloomberg, "sending related stocks soaring in South Korea and China, but also skepticism as past claims had been later proven wrong."
China

Generative AI Services Pulled From Apple App Store in China (techcrunch.com) 9

Multiple generative AI apps have been removed from Apple's China App Store, two weeks ahead of the country's new generative AI regulations that are set to take effect on August 15. From a report: The move came after Chinese developers received notices from Apple informing them of their apps' removal. In its letter to OpenCat, a native ChatGPT client, Apple cited "content that is illegal in China" as the reason for pulling the app. In July, China announced a set of measures to regulate generative AI services, including API providers. The rules require AI apps operating in China to obtain an administrative license, which is reflected in Apple's removal notice.

"As you may know, the government has been tightening regulations associated with deep synthesis technologies (DST) and generative AI services, including ChatGPT. DST must fulfill permitting requirements to operate in China, including securing a license from the Ministry of Industry and Information Technology (MIIT)," Apple said to OpenCat. "Based on our review, your app is associated with ChatGPT, which does not have requisite permits to operate in China."

China

China Looks To Limit Children To Two Hours a Day On Their Phones (reuters.com) 44

An anonymous reader quotes a report from Reuters: China's cyberspace regulator said on Wednesday children under the age of 18 should be limited to a maximum of two hours a day on their smartphones, sending shares in tech companies tumbling. The Cyberspace Administration of China (CAC) said it wanted providers of smart devices to introduce so-called minor mode programs that would bar users under 18 from accessing the internet on mobile devices from 10 p.m. to 6 a.m. Providers would also have to set time limits under the proposed reforms, the CAC said. Users aged 16 to 18 would be allowed two hours a day, children aged eight to 16 would get one hour while children under eight would be allowed just eight minutes. But the CAC said service providers should allow parents to opt out of the time limits for their youngsters. Xia Hailong, a lawyer at the Shanghai Shenlun law firm, said it'll take "a lot of effort and additional costs" for internet companies to implement these new regulatory requirements. "And the risk of non-compliance will also be very high. So I believe that many internet companies may consider directly prohibiting minors from using their services."
China

Beijing Reports Heaviest Rain in 140 Years (theguardian.com) 56

Rains that pummelled Beijing in recent days were the heaviest since records began 140 years ago, the city's weather service has said, as China faced accusations that it had undermined key climate talks with other countries. From a report: Storm Doksuri, a former super typhoon, swept northwards over China after hitting southern Fujian province last week, following its battering of the Philippines. The average rainfall for the entire month of July was dumped on Beijing in just 40 hours, with heavy rains pummelling the capital and surrounding areas since Saturday.

"The maximum [amount] of rainfall recorded during this storm, which was 744.8 millimetres, occurred at the Wangjiayuan reservoir in Changping," the Beijing Meteorological Service said, adding it was the "heaviest rainfall in 140 years." The extreme weather comes as China's foreign ministry denied reports that it obstructed discussions on tackling climate change at G20 meetings in India last week, calling the accusations "completely inconsistent with the facts."

Australia

Australian Senate Committee Recommends Government Ban on TikTok Be Extended To WeChat (apnews.com) 10

An Australian Senate committee has recommended a ban on the Chinese-owned video-sharing app TikTok from federal government devices be extended to China's most popular social media platform, WeChat. From a report: The Committee on Foreign Interference through Social Media also recommended in a report late Tuesday that social media giants such as Facebook and Twitter should become more transparent or be fined. Committee chair James Paterson said on Wednesday the report's recommendations would make Australia a more difficult target for the serious foreign interference risks that the nation faced. "It tackles both the problems posed by authoritarian-headquartered social media platforms like TikTok and WeChat and Western-headquartered social media platforms being weaponized by the actions of authoritarian governments including Facebook, YouTube and Twitter," Paterson told reporters.
China

China Curbs Drone Exports Over 'National Security Concerns' (cnn.com) 76

An anonymous reader quotes a report from CNN: China will place export controls on drone and drone equipment in order to "safeguard national security and interests," its commerce ministry announced Monday, in a move that could impact the war in Ukraine. The restrictions on equipment will require vendors to seek permission to export certain drone engines, lasers, imaging, communications and radar gear, and anti-drone systems. Consumer-grade drones with certain specifications are also subject to the controls, which come into effect September 1. All civilian drones not included in the controls are prohibited from being exported for military purposes, an unidentified ministry spokesperson said in an online statement. "China's modest expansion of the scope of drone control this time is an important measure to demonstrate its commitment as a responsible major country to implement global security initiatives and maintain world peace," the statement said, adding that China has "consistently opposed the use of civilian drones for military purposes."

More than 50% of drones sold in the US are made by Shenzhen-based DJI, the world's top drone manufacturer, with DJI models popular among US public safety agencies, according to two US lawmakers. They earlier this year introduced legislation that would restrict the company from operating on US communications infrastructure. The US last year placed sweeping controls banning Chinese companies from buying advanced chips and chip-making equipment without a license. Beijing last month imposed export controls on two elements essential for manufacturing semiconductors. The controls go into effect August 1.

Drones have already figured into US-China tensions. The US added DJI to an investment blacklist in 2021, alleging that the firm played a role in facilitating human rights abuses against China's Uyghur Muslims and other ethnic and religious minorities in the far western region of Xinjiang. The company was already on the US entity list, barring it from buying American technology. DJI denied having done anything to justify being placed on the list. On Tuesday, following the ministry announcement, DJI released a statement on its website saying it has never designed or marketed equipment for military purposes and would "actively cooperate" with the new export control policy.

The Military

Biden Reverses Trump Decision, Keeps Space Command In Colorado (politico.com) 199

An anonymous reader quotes a report from Politico: President Joe Biden has determined that Colorado Springs will be the permanent headquarters of U.S. Space Command, reversing a Trump administration decision to move the facility to Alabama, the Pentagon announced Monday. The decision will only intensify a bitter parochial battle on Capitol Hill, as members of the Colorado and Alabama delegations have spent months accusing each other of playing politics on the future of the four-star command.

The command was reestablished in 2019 and given temporary headquarters in Colorado while the Air Force evaluated a list of possible permanent sites. With an eye on Russia and China, its job is to oversee the military's operations of space assets and the defense of satellites. Pentagon spokesperson Brig. Gen. Pat Ryder said Biden notified the Department of Defense on Monday that he had made the decision, after speaking with Defense Secretary Lloyd Austin and weighing the input of senior military leaders. "Locating Headquarters U.S. Space Command in Colorado Springs ultimately ensures peak readiness in the space domain for our nation during a critical period," Ryder said in a statement. "It will also enable the command to most effectively plan, execute and integrate military spacepower into multi-domain global operations in order to deter aggression and defend national interests." Austin, Air Force Secretary Frank Kendall and U.S. Space Command chief Gen. James Dickinson all support Biden's decision, Ryder added.

The most significant factor Biden weighed in making the decision was the impact such a move would have on the military's ability to confront the changing threat from space, according to a senior administration official, who like others was granted anonymity to discuss sensitive deliberations. Keeping the headquarters at Colorado Springs "maintains operational readiness and ensures no disruption to its mission or to its personnel," according to the official. The command is set to achieve "full operational capability" this month, the official said. A move to Alabama, by contrast, would have forced the command to transition to a new headquarters in the mid-2020s, and the new site would not have been open until the early to mid-2030s, the official said. "The president found that risk unacceptable, especially given the challenges we may face in the space domain during this critical time period," according to the official.

Hardware

A Room-Temperature Superconductor? New Developments (science.org) 102

Derek Lowe, a medicinal chemist and freelance writer on science and pharmaceutical topics, comments on the latest developments around last week's remarkable claim of a well-above-room-temperature superconducting material at ambient pressure, dubbed LK-99. Here's an excerpt from his post: As of this morning, there are (as yet not really verified) reports of replication from the Huazhong University of Science and Technology in China. At least, a video has been posted showed what could be a sample of LK-99 levitating over a magnet due to the Meissner effect, and in different orientations relative to the magnet itself. That's important, because a (merely!) paramagnetic material can levitate in a sufficiently strong field (as can diamagnetic materials like water droplets and frogs), but these can come back to a particular orientation like a compass needle. Superconductors are "perfect diamagnets," excluding all magnetic fields, and that's a big difference. The "Meissner effect" that everyone has been hearing about so much is observed when a material first becomes superconductive at the right temperature and expels whatever magnetic fields were penetrating it at the time. All this said, we're having to take the video on the statements of whoever made/released it, and there are other possible explanations for the it that do not involve room-temperature superconductivity. I will be very happy if this is a real replication, but I'm not taking the day off yet to celebrate just based on this.

And even though I'm usually more of an experimental-results guy than a theory guy, two other new preprints interest me greatly. One is from a team (PDF) at the Shenyang National Laboratory for Materials Science, and the other (PDF) is from Sinead Griffin at Lawrence Berkeley. Both start from the reported X-ray structural data of LK-99 and look at its predicted behavior via density functional theory (DFT) calculations. And they come to very similar conclusions: it could work. This is quite important, because this could mean that we don't need to postulate completely new physics to explain something like LK-99 - if you'd given the starting data to someone as a blind test, they would have come back after the DFT runs saying "You know, this looks like it could be a really good superconductor..." [...]

I am guardedly optimistic at this point. The Shenyang and Lawrence Berkeley calculations are very positive developments, and take this well out of the cold-fusion "we can offer no explanation" territory. Not that there's anything wrong with new physics (!), but it sets a much, much higher bar if you have to invoke something in that range. I await more replication data, and with more than just social media videos backing them up. This is by far the most believable shot at room-temperature-and-pressure superconductivity the world has seen so far, and the coming days and weeks are going to be extremely damned interesting.

China

The US and Europe Are Growing Alarmed By China's Rush Into Legacy Chips (time.com) 159

An anonymous reader quotes a report from TIME: U.S. and European officials are growing increasingly concerned about China's accelerated push into the production of older-generation semiconductors and are debating new strategies to contain the country's expansion. President Joe Biden implemented broad controls over China's ability to secure the kind of advanced chips that power artificial-intelligence models and military applications. But Beijing responded by pouring billions into factories for the so-called legacy chips that haven't been banned. Such chips are still essential throughout the global economy, critical components for everything from smartphones and electric vehicles to military hardware. That's sparked fresh fears about China's potential influence and triggered talks of further reining in the Asian nation, according to people familiar with the matter, who asked not to be identified because the deliberations are private. The U.S. is determined to prevent chips from becoming a point of leverage for China, the people said.

Commerce Secretary Gina Raimondo alluded to the problem during a panel discussion last week at the American Enterprise Institute. "The amount of money that China is pouring into subsidizing what will be an excess capacity of mature chips and legacy chips -- that's a problem that we need to be thinking about and working with our allies to get ahead of," she said. While there's no timeline for action to be taken and information is still being gathered, all options are on the table, according to a senior Biden administration official. The most advanced semiconductors are those produced using the thinnest etching technology, with 3-nanometers state of the art today. Legacy chips are typically considered those made with 28-nm equipment or above, technology introduced more than a decade ago.

Senior E.U. and U.S. officials are concerned about Beijing's drive to dominate this market for both economic and security reasons, the people said. They worry Chinese companies could dump their legacy chips on global markets in the future, driving foreign rivals out of business like in the solar industry, they said. Western companies may then become dependent on China for these semiconductors, the people said. Buying such critical tech components from China may create national security risks, especially if the silicon is needed in defense equipment. "The United States and its partners should be on guard to mitigate nonmarket behavior by China's emerging semiconductor firms," researchers Robert Daly and Matthew Turpin wrote in a recent essay for the Hoover Institution think tank at Stanford University. "Over time, it could create new U.S. or partner dependencies on China-based supply chains that do not exist today, impinging on U.S. strategic autonomy."

United States

Biden To Sign Order Curbing US Tech Investments in China by Mid-August (bloomberg.com) 33

President Joe Biden is planning to sign an executive order to limit critical US technology investments in China by mid-August, Bloomberg News reported Friday, citing people familiar with the internal deliberations. From the report: The order focuses on semiconductors, artificial intelligence and quantum computing. It won't affect any existing investments and will only prohibit certain transactions. Other deals will have to be disclosed to the government. The timing for the order, slated for the second week of August, has slipped many times before, and there is no guarantee it won't be delayed again. But internal discussions have already shifted from the substance of the measures to rolling out the order and accompanying rule, said the people familiar who spoke on condition of anonymity. The restrictions won't take effect until next year, and their scope will be laid out in a rulemaking process, involving a comment period so stakeholders can weigh in on the final version.
China

China's Jobless Graduate Army Falls Through Cracks in Economy (nikkei.com) 84

Record youth unemployment after Beijing clampdown on private sector, FDI slump. From a report: New graduate Glonee Zhang had high hopes when he landed a job at a lithium battery company in Shenzhen last summer. Now, like more than one in five young people in China, he's out of work. An English major entering a post-COVID working world, Zhang thought "the end of the pandemic would bring a bright future." Six months later, he and half of the firm's intake of 400 new grads were laid off when the company's sales slumped by 10% year-on-year. "Sometimes I feel my soul is being torn apart," said a downbeat Zhang, getting by in the meantime doing odd jobs.

Caught between a long-running regulatory crackdown by Beijing on private enterprise, and a slide in hiring by foreign firms in the country, young people now face a record jobless rate of 21.3%. Since the official number only includes people actively seeking work, some economists say the percentage of young people not in employment, education or training could be significantly higher. While the pandemic may have gone, its departure has unmasked a growing structural problem for President Xi Jinping and the Chinese Communist Party (CCP). The world's second-biggest economy is producing twice the number of graduates it did 10 years ago, with nearly 12 million this year - but not the jobs they're qualified to do.

"Over the years, China has expanded universities, but China is still a largely manufacturing [and services] based economy," Robin Xing, chief China economist at Morgan Stanley in Hong Kong, told Nikkei Asia. "This is structural, because the economy itself is big, it's gradually changing. But it takes time for China to become a more advanced economy like Japan, South Korea and the U.S., which have more professional services dominating job creation." In December 2019, before COVID struck, the youth jobless rate was 12.2%. Graduates like Zhang are now forced to consider continuing in higher education or trying for highly competitive but stable government jobs for which they are overqualified. Studying or working overseas is also an option for some.

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