UNIVERSITY STUDENTS IN SHANGHAI SEE ROUGH ROAD AHEAD FOR

C O N F I D E N T I A L SECTION 01 OF 04 SHANGHAI 000128

SIPDIS

STATE FOR EAP/CM
TREASURY FOR OASIA - DOHNER, HAARSAGER, WINSHIP
USDOC FOR ITA MAC DAS KASOFF, MELCHER, SZYMANSKI
NSC FOR LOI

E.O. 12958: DECL: 3/18/2034
TAGS: PREL PGOV ECON ELAB SOCI PHUM CH
SUBJECT: UNIVERSITY STUDENTS IN SHANGHAI SEE ROUGH ROAD AHEAD FOR
CHINA, BLEAK JOB PROSPECTS

REF: A) SHANGHAI 115; B) SHANGHAI 23; C) 08 SHANGHAI 467; D) SHANGHAI 39; E) BEIJING 448; F) SHANGHAI 126; G) BEIJING 682

CLASSIFIED BY: Christopher Beede, Pol/Econ Section Chief, U.S.
Consulate, Shanghai, U.S. Department of State.
REASON: 1.4 (b),(d)




1. (C) Summary: During a series of roundtable discussions,
university students in Shanghai said they see a rough road ahead
for China over the next several years but believe the economic
downturn will help China in the long run if it leads to economic
restructuring. Although many students were skeptical that
government stimulus measures will boost domestic rural
consumption in the near future, they see little alternative to
placing their faith in the Chinese Government. Most students
have seen the greatest impact of the economic crisis on their
own job prospects. Many lamented their dearth of options and
expressed a preference for stable government or university jobs
since opportunities in the private sector, especially in
multinational corporations (MNCs),have dried up. Government
measures such as increasing the number of graduate students may
lead to "diploma laundering," said one scholar. End summary.


2. (SBU) Poloff held separate roundtable discussions in
Shanghai with students at Fudan University, Jiaotong University,
Tongji University, and Shanghai International Studies University
(SISU) in February and March. The discussions involved a total
of about 40 undergraduate, Masters, and PhD students, most
majoring in international relations, public policy, political
science, and finance. This is the second of two reports on
discussions with university students, this one focusing on the
students' perspectives on China's future amid the global
economic downturn and job prospects. The first report looked at
their outlook on the future of U.S.-China relations (Ref A).

China Faces a Tough Road Ahead the Next Few Years
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3. (SBU) Many of these students expect the next 3-5 years will
be "tough" for China, as the Chinese Government deals with
myriad domestic problems including rising unemployment caused by
a slowdown in China's export industries. China needs to boost
its domestic consumption and lessen its dependence on exports,
said several students, but they were skeptical that current
government stimulus measures will have a significant impact on
domestic consumption. The Central Government is currently
focused on boosting consumption in rural areas, which represent
a huge potential market, but the government needs to first make
rural consumers confident about their future by providing
greater social security, said a PhD student at Fudan University.
"These farmers do not want to buy a new TV; they feel they need
to save money for healthcare and education," he said. This
sentiment was shared by other university students who expressed
skepticism that government stimulus measures will boost domestic
consumption without first resolving social welfare issues. "The
most important thing is to create a social safety net so people
feel comfortable spending," said an MA student at SISU.

Crisis Creates Opportunity for China
--------------

4. (SBU) Most of these Shanghai students told Poloff they are
somewhat optimistic about the long-term future of China since
they believe the global economic crisis will force the country
to undergo necessary reforms. "This poses a good opportunity
for China to change its development model," moving away from an
export-oriented, resource-consuming economy to a more
"diversified" one, said a Fudan student. An MA student at SISU
thinks the economic crisis will be "good for China" in the long
run because "it will lead to social restructuring and reforms."
Many migrant workers who lost jobs in coastal cities have
acquired special skills and exposure to the outside world, which
will help them start their own businesses in the countryside,
said another Fudan student. She cited the experience of her
relatives who were recently laid-off by factories in Guangdong
but returned to their hometown in Sichuan to start their own

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businesses. A silver lining to the crisis on the international
front, said an MA student at Fudan, is that China may experience
less external criticism, particularly from the United States on
issues like human rights, since China's help is needed to
overcome the crisis.

"We Will Have 8 Percent Growth...If Premier Wen Says So"
-------------- --------------

5. (SBU) Some students expressed confidence that the Chinese
Government will put China's economy back on track. The Central
Government will "conquer this crisis" by implementing the right
policies, said an MA student at Jiaotong University. Other
students were more nuanced about the Chinese Government's role,
expressing their hope that the government will adopt the right
measures. Chinese people have proved their resilience
throughout history and will surely overcome the current economic
crisis, said an MA student at Tongji, but the Communist
leadership's future depends on if it can put "the people first
and implement reforms." Several students expressed skepticism
of the government's official target of 8 percent GDP growth this
year. "If Premier Wen says we will have 8 percent growth, then
we will have 8 percent," quipped an MA student at SISU. In the
end, "we have no choice but to believe the Chinese Government
will do the right thing," he added.

Mixed Impact of Economic Crisis
--------------

6. (SBU) Many of these students in Shanghai told Poloff they
have not seen much direct impact of the economic crisis in
Shanghai. "Shopping malls (in Shanghai) are still packed with
shoppers...if you just look around, it's hard to imagine an
economic crisis is going on," said a student at Fudan. Another
Fudan PhD student said he thinks the crisis' impact has been
different for China and the United States. In the United
States, everyone, especially the middle class, has been impacted
by the crisis, whereas in China, the poor, low-income workers
have been impacted the most, he said. The middle class
consumers in Shanghai are still relatively unaffected, said
several students, who have so far seen very few shop closures in
Shanghai.


7. (SBU) The situation outside of Shanghai is mixed depending
on the region and industry, said the students. One student with
family in Yiwu, Zhejiang Province (a city heavily dependent on
commodity exports) said the family's export business has been
hard hit and will probably lay-off workers. (Note: For more on
Yiwu, see Refs B and C. End note.) One student said a relative
in Wuxi, Jiangsu Province, recently lost a job at an auto parts
company, which is planning to lay-off one thousand workers. A
student from Sichuan recently returned to her rural hometown
during the Chinese New Year (CNY) holiday. She did not notice
any changes in her village, as most of its residents are farmers
tilling their own fields, she said. A student originally from
Henan Province, on the other hand, saw many unemployed migrants
returning from coastal cities on his recent trip there during
the CNY holiday. Many factories from Shanghai, Suzhou (Jiangsu
Province),and Wuxi are moving into the countryside to cut cost,
causing new environmental problems in those areas, said a
student from Yancheng, Jiangsu Province. There was almost no
pollution in his hometown until recently, when factories from
more developed cities started moving in. Now, there is "no safe
drinking water" in Yancheng, he lamented. A student from Xian,
Shaanxi Province said she saw "life as usual" on her recent trip
home during the CNY, adding that her mother's company, a local
railway infrastructure SOE, is actually doing better this year,
probably due to government stimulus measures. Another student
said his mother's hospital in Hubei Province is doing fine since
"there will always be sick people," but his father's
import/export company is suffering.

Glum About Jobs: "We Need to Lower Our Expectations"
-------------- --------------

8. (SBU) These university students in Shanghai have seen the
biggest impact of the economic crisis on their own job

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prospects. All roundtable participants, including students who
are not graduating and looking for jobs this year, had stories
to tell either of themselves or friends and relatives undergoing
what they characterized as a job-hunting "nightmare." Jobs in
the private sector, especially MNCs, have dried up almost
completely, they said. Many MNCs are freezing new hiring and
are in a "wait and see" mode this year, said several students.
An MA student at Tongji said competition even for internships at
MNCs has been very intense this year. According to one student
at Fudan, the top 10 percent of students graduating from Fudan's
College of Economics usually have no problem finding high-paying
jobs in multinational consulting and investment firms, but most
this year are "settling" for jobs in accounting firms despite
longer work hours and reduced pay. "We have to lower our
expectations," said several students. SOEs may actually benefit
from this downturn, since the more qualified students who would
otherwise work for MNCs may have no option but to work for SOEs
this year, said one student.


9. (SBU) These students see dwindling options in the private
sector and are increasingly looking for "stable" jobs in
government and universities. The number of teaching, research,
and assistant positions in universities and research institutes
has largely been unaffected by the economic downturn, said
several students and professors of these universities. Most of
the PhD participants in these discussions who will be graduating
this year said their first choice would be a job in a university
or research institute.


10. (C) All these students put government jobs at the top of
their list, but they see increased competition in this area.
(Note: Liu Xiangping, Professor at Nanjing University, said in a
separate conversation that there are 170,000 more university
graduates taking the civil service exam this year than last
year. This figure has not been verified. End note.) One MA
student at Fudan said he received an offer from a furniture
company with a base monthly salary before taxes of 3800 RMB (USD
560). He will soon take the exam for a local government
position, however, and if he passes, he will opt for the
government job. Though the government salary may be lower, "it
is more stable with good benefits," he said. Local district
governments within Shanghai, such as Jingan and Changning
districts, are also opening up positions for university
graduates this year, said several students who were planning to
apply for these positions. (Note: In a separate conversation,
Shanghai Party Secretary Yu Zhengsheng told the Consul General
that securing employment for university graduates is a top
concern for the Shanghai Municipal Government. See Ref D. End
note.)


11. (SBU) Some of these students expressed their desire to put
off job-hunting and continue studying, either domestically or
overseas, until the economic storm passes. A BA student at
Fudan who will be graduating this year said she decided to
pursue an MA degree in Canada since jobs in the private sector
are scarce. Students returning from overseas with foreign
language and international experience will only increase the
level of competition in the local job market, lamented some
students currently not planning to study abroad. Several
students mentioned that the job situation for students in
"second and third-tier" universities was particularly tough, and
many of their friends at these universities have just "given up"
on job-hunting this year and are looking to continue studying,
mostly at "second tier" universities overseas to acquire
language skills.

Government Measures and "Diploma Laundering"
--------------

12. (C) Hua Tao, Professor at Nanjing University Hopkins
Center, said during a separate conversation that the Ministry of
Education recently announced plans to increase the number of
students in professional postgraduate programs, such as Master
of Business Administration (MBA) and Master of Public
Administration (MPA),by 50,000 this year and has allocated

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every university with a "quota." According to Zhu Mingquan,
Professor in the Department of International Politics at Fudan
University, the local government is providing Fudan with
additional funding this year to increase its number of graduate
students. He said Fudan had no full-time students pursuing MPA
degrees last year, but this year, the university will admit 100
full-time students in the MPA program. Zhu said such measures
could lead to "diploma laundering" (i.e., students from second
and third tier universities pursuing MA degrees at first tier
universities like Fudan so they can present themselves as "Fudan
graduates" to potential employers). (Note: For more on
government measures to assist university graduates, see Refs E
and F. End note.)

Comment
--------------

13. (C) These roundtable discussions were held at "first tier"
elite universities in Shanghai. These university students are
widely recognized as the "cream of the crop" in Shanghai; in any
other year, they probably would have little trouble finding good
jobs. The fact that even these students are facing anxiety and
difficulty finding jobs this year does not bode well for
students from lesser universities. Several professors in
separate discussions talked of government efforts to send
university students back to their rural hometowns to work in
local governments and schools, and a couple of students at these
roundtables expressed some interest in doing this. Most of
these students in Shanghai, however, expressed a strong
preference for staying in Shanghai, even if it means not finding
a job for months or, possibly, much longer. The situation may
be relatively calm now since the job-hunting season just began,
but anxiety and anger among university graduates could pick up
if they still have not found jobs by the end of 2009, said some
professors. The issue of graduate unemployment is obviously
very sensitive for the Chinese and local governments, as Poloff
discovered during a recent trip to Nanjing, Jiangsu Province,
where requests to hold discussions with university students at
Nanjing University and Nanjing Normal University were rebuffed
by university FAOs, who deemed this subject too sensitive.
Several professors in Nanjing were also reluctant to discuss
this issue. The roundtables in Shanghai were organized directly
through university professors already well-known to Poloff.
CAMP