Life as a Chinese Gen-Zer just got a lot harder thanks to the Chinese government hiking college tuition by up to 54%

• A drop in government funding has prompted Chinese universities to raise tuition by up to 54%.
• The increase in tuition could pose a significant burden to rural families, says economist Keyu Jin.

China's Gen Z has been dealt a bad hand. The generation has to contend with the country's slowing economy and soaring youth unemployment rate. And a recent decision to hike college tuition by up to 54% this year means life is just going to get that much harder.

The hikes are set to kick in this year, with some universities in the heavily populated Jilin and Sichuan provinces raising tuition by up to 41%, per Reuters. The provinces' combined population of over 107 million residents is more than two and a half times that of California's.

The price increases vary by the university. The East China University of Science and Technology in Shanghai said in a June 4 statement that the annual tuition fees for liberal arts majors would increase by 30% to 6,500 Chinese yuan, or $901. The Shanghai-based university's STEM and physical education majors will see a steeper hike of 54%, it announced.

In comparison, Shanghai Dianji University said in a statement on May 17 that it would be raising tuition for STEM majors by 40% to $971. Management, economics, and literature majors at the same university will see a relatively smaller increase of 30%.

Studying at a Chinese university "costs far less" than in the US and UK, according to Times Higher Education. Annual tuition for an undergraduate degree at Peking University, one of China's leading universities, ranges between $3,589 to $4,141. That is roughly 15 times cheaper than Harvard College, Harvard University's undergraduate college, which charges $54,269 in annual tuition.

The relatively low cost of college tuition also means that student debt is virtually non-existent in China. But the sudden hike in fees may put some financial pressure on those earning a lower income.

Keyu Jin, an associate professor at the London School of Economics and the author of "The New China Playbook," told Insider that the fee hike would cause tuition to "average around 15,000 Chinese yuan a year in the pilot cities." She added that this would be a "significant burden" for rural families who earn "an average income of 20,000 Chinese yuan."

The tuition fee hike was a long time coming

Most Chinese universities are publicly funded. However, the education ministry's funding for higher education was slashed by 3.7% from 2022 to 2023, which means universities have resorted to tuition fee hikes to close the gap.

The fee hikes have not gone down well with the Chinese, who question the timing of the increases given the dire state of the Chinese economy.

"Tuition fee hike? Has the economy even shown any growth? The pandemic is just over. Forget economic growth, the economy isn't even doing as well as before. Why are they raising tuition fees now? It would have been alright if the economy had grown, but there hasn't been any growth at all. So what is the hike for?" read a comment to a Weibo post on the topic.

"I'm speechless. It's fine for the prices of other things to increase, but tuition fees too?" another Weibo user wrote.

But some academics think the fee hikes are not as astronomical as the top-line figures suggest.

Wu Xiaogang, a sociology professor at New York University Shanghai, told Insider the rate of the hikes is likely equivalent to smaller, yearly increases over the last decades.

"A 40% increase seems high, but if you do it annually, then you don't feel any difference," said Wu.

"China has not increased its tuition fees for 20 years, and this was long overdue, as income and cost have risen significantly," said Mark Greeven, a professor at the International Institute for Management Development China, a business school.

Youth unemployment in China is soaring

Making the higher education system accessible has been a key driver for China's high tertiary education enrollment rate. China's enrollment rate for higher education soared to 57.8% in 2021, up from 3.4% in 1990, per Statista.

NYU Shanghai's Wu told Insider that in the US, students would "actually respond to market signals" and choose "not to go to college" if getting a degree doesn't pay off.

"But in China, we don't see this. It is always the case that people say that for education, the higher, the better. It is almost like a cultural norm to pursue higher education if you have this chance," Wu added.

And the burden of paying for college doesn't manifest in the form of heavy student debt as in the US: Families, instead, shoulder that weight.

"Chinese households are dynastic. Instead of getting into heavy debt, the parents will run down their savings," said Jin. "The youth already borrow a lot for consumption, so education debt may crowd out some consumer debt."

But this means that the Chinese Gen-Zer will be kickstarting their working lives in a chaotic job market where one in five people their age are unemployed.

And all this is taking place in an environment where the country's millennials — Gen Z's college seniors and workplace superiors — are "lying flat" and giving up on the hustle life. Or worse, "letting it rot," and choosing to languish and do absolutely nothing in a quiet rebellion against societal norms.

"In many ways, economic opportunities are not going to be as plentiful, while competition will be more fierce, and we simply won't see the kind of income growth observed in the last few decades," said Jin. "Reduced expectations, greater angst, and anxiety is something that the Chinese people have not experienced for the last forty years."

The dearth of economic opportunity has sowed widespread disenchantment among China's youth. It has even spawned social movements calling for the rejection of the corporate rat race.

"China's demographic challenges are already a major economic headwind. Its structural economic challenges will only be exacerbated if an entire generation of young people is underemployed," Shehzad Qazi, the managing director of China Beige Book International, a US-based data provider, told Insider.

NYU Shanghai's Wu believes that the wave of unemployment among China's youth could have disastrous consequences on their career development.

"Say, for instance, that someone doesn't get a job in five years. Then that time is gone. And because younger people will come in, say, five years later when the economy gets better: Instead of hiring people who could not get a job for five years, I would rather hire newer, fresher graduates," said Wu.