China's New Underclass: White-Collar Workers

Click to view photos of China's high-tech underclass Mark Leong for Newsweek

At first glance, Guo Yilei looks like a Chinese success story. Born to a poor peasant family in China's remote Gansu province, he's now a 26-year-old computer programmer in the Big Cabbage (as some call Beijing nowadays). By Chinese standards he makes decent money, more than $70 a week. When he has work, that is. It can take months to find the next job. And meanwhile, he's living in Tangjialing, a reeking slum on the city's edge where he and his girlfriend rent a 100-square-foot studio apartment for $90 a month. "When I was at school, I believed in the saying, 'Knowledge can help you turn over a new leaf,'" says Guo. "But since I've started working, I only half-believe it."

Guo and an estimated million others like him represent an unprecedented and troublesome development in China: a fast-growing white-collar underclass. Since the '90s, Chinese universities have doubled their admissions, far outpacing the job market for college grads. This year China's universities and tech institutes churned out roughly 6.3 million graduates. Many grew up in impoverished rural towns and villages and attended second- or third-tier schools in the provinces, trusting that studying hard would bring them better lives than their parents had. But when they move on and apply for jobs in Beijing or Shanghai or any of China's other booming metropolises, they get a nasty shock.

They may be smart and energetic, but some are starting to ask if the promise of a better life was a lie. They're known as "ants," for their willingness to work, their dirt-poor living conditions, and the seeming futility of their efforts. "These ants have high ambitions but virtually no practical skills," says Prof. Zhou Xiaozheng, a leading sociologist at the People's University of China. It's a potentially explosive situation. Unrest is sweeping the manufacturing sector, where strikers at several factories have demanded not only better pay but also the right to elect their own representatives for collective-bargaining efforts—a demand that could pose a serious political challenge to the regime.

The discontent rising among the ants is even more worrying. Blue-collar wages have actually soared recently, while white-collar pay is shrinking, thanks to a massive glut of university graduates. And salary cuts aren't their only complaint. Official Chinese labor statistics (which tend to be unrealistically rosy) claim that 87 percent of college grads find work of some sort sooner or later. In other words, even the government admits that at least one in eight is permanently unemployed. And those who get jobs don't always find work in their chosen fields. Nearly a third of Beijing's ants are employed in "sales in private business." For tech engineers, that often means peddling low-end electronic gear for the city's computer wholesalers.

Tangjialing used to be a quiet farming village of 3,000 or so, but in the past few years it has mushroomed to a population of 50,000 mostly underemployed young people, crammed into a trash-strewn warren of cramped alleys and subdivided rooms. Beijing alone has roughly a half-dozen similar ant colonies, and their potential for unrest could be even bigger than among factory workers, Zhou warns. College grads have far higher expectations than the migrant laborers who have fueled China's growth for three decades. "Ants are educated. They speak foreign languages. They're Internet-savvy. It's that potential for trouble that has the government worried," he says. "If they aren't satisfied with their living conditions and want to start a movement, like the 1989 Tiananmen Square protests, it becomes a huge problem."

The ants don't seem to be organizing in any big way so far. But they clearly have the necessary technical skills and a sense of common backgrounds and objectives. "It's like I've joined an army," says Wang Lei, a young University of Inner Mongolia graduate who has found steady work as a computer programmer after months of searching. "For the rest of my life, I'll meet former Tangjialing inhabitants and have strong ties with them because of our shared experience." Comments like this make China's leaders nervous, not least because the ant tribes are so fluid and difficult to monitor. If they were somehow to make common cause with other restive rural-born Chinese, such as landless farmers or migrant workers, they'd be extremely hard to suppress.

For now the ants are still scrambling to get rich. Wang, for example, hasn't given up his dream of becoming the first software entrepreneur in his dusty hometown. He commutes three hours a day to and from the company where he earns roughly $200 a month as a programmer. "I'll go back to my hometown only after I've learned everything the city can teach me," he says. "I'd have my own company and buy an apartment." Meanwhile, he counts himself fortunate. Desperation has forced some of his former schoolmates and neighbors to take jobs as security guards for $100 or less. "I didn't spend my parents' savings to waste my education in a uniform at a factory gate," says Wang.

Nevertheless, even ants may eventually lose patience, and the government wants to head off trouble. Warning of health and fire hazards in the ramshackle dwellings of Tangjialing, where sanitation is inadequate and power lines festoon buildings and crisscross the narrow spaces between them, local authorities have decided to raze the entire district by January 2011. They've just begun demolition for a $600 million makeover, partly to build low-rent housing for legally registered Beijing residents (which ants are not). Microbuses have begun hauling the inhabitants to other villages on Beijing's outskirts, where onetime farmers rent out tiny rooms to incoming ants. "Many people have already moved there," says Zhang Zhipeng, 24, a Tangjialing resident who's trying out for a job selling LED chips. "The rooms are a little worse because many don't have windows. But the Internet speed is faster, because you don't have to share with so many people." Above all, ants are adaptable—fortunately for China's leaders.