Next year will see an influx of 2.8 million new university graduates into China's already-crowded labor market.

Zeng Xiangquan, head of the School of Labor and Personnel at People's University and China's prominent specialist in labor economics, warned that university graduates need to reduce their expectations and design reasonable career development plans to meet the tight new employment situation.

The latest statistics show that the starting annual salary of university graduates of 2003 dropped by 40 percent from the previous year.

Zeng said it is normal that the returns on education investment drop as the number of university graduates increases. However, in Western developed countries, a university graduate needs to work for 10 to 15 years to recoup his or her payment for a university education, while in China university graduates of some popular majors can recover their university spending within one year.

"It is astonishing. Therefore, even though the starting salary of Chinese university graduates shrank by 40 percent last year, the income is still reasonable for them," he added.

Zeng holds that with the expansion of university student recruitment, the employment of university graduates has turned out to be one of three major employment problems in current China, following the employment difficulties of redundant rural laborers and urban laid-off workers.

China only had 400,000 university graduates in 1978. At that time, every university graduate was regarded as a "treasure" by the government and state-owned enterprises. Today, millions of students graduate from universities every year, making university graduates not as precious as before.

However, this does not mean that there is an over-supply of university graduates.

In 2002 alone, about 20 million new workers entered the employment market, but half of them had only received junior middle school education or less. Currently, a mere 5 percent of China's whole population has received higher education. The figure is far lower than the average level in developed countries. University graduates still belong to the top stratum of Chinese society.

Therefore, they have exaggerated expectations, said Zeng.

The employment markets for university graduates in metropolises like Beijing, Shanghai and Guangzhou tend to be saturated, while western and central China are still short of people who have received higher education.

"University graduates are only interested in working in the downtown areas of big cities. Even the suburbs of Beijing are short of university graduates," Zeng said.

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