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BEIJING (Reuters) - Down-at-heel Xiaojiahe in Beijing's university district seems an unlikely haven for China's aspiring elite, but its reeking alleys and dank rooms offer a low-budget bolthole for graduates battling to find work.
"It's not the best living environment here," said Qi Shaoguang, a 22-year-old law graduate from China's dustbowl province of Henan, as he looked past a row of shabby brick huts. "People who find a good job tend to move out pretty quickly."
Qi shares a 10 square meter (about 100 sq ft) room in Xiaojiahe with an unemployed friend and a grimy public toilet with dozens of other tenants.
He is one of 1.2 million Chinese college graduates seeking work in a labor market that was already limping from years of bungled policy making before being almost crippled by the global financial crisis.
He will jostle for scarce jobs with another 6.1 million students set to graduate in the summer and untold numbers of skilled professionals already laid off in Chinese cities amid slumping growth.
"This year, it's not a question of finding a good job. It's a question of finding anything," said Qi, whose neighbors include cash-strapped students and newly arrived migrant workers, 20 million of whom have lost their jobs across the country.
The graduate job crunch has alarmed the Chinese government, which fears a rising tide of frustration and disillusionment could spill over into violence and confrontation in a year of politically sensitive anniversaries.
In June, China will pass the 20th anniversary of the brutal crushing of anti-government protests led by students centered on Beijing's Tiananmen Square in 1989.
A more likely danger, however, is creeping despair among millions of degree-holders -- once told that higher education would be their ticket out of privation, but now often forced to compete for menial jobs.
A final year student in northern Hebei province killed herself in February after months of job-seeking frustration. She wrote of her fear of "letting down" her family in her diary.
"A university student, who can't do anything, complaining all day about this and that, with high aspirations but low abilities, looking down on hard work, can't get a skilled job... This is the tragedy of a university student!" a excerpt of her diary reproduced in local media said months before she died.
The government response has mixed sympathy with censure, promising to pull out all the stops to find jobs for graduates, while demanding they abandon their "elitist" leanings and accept humbler work and lower salaries in more remote posts.
Chinese Premier Wen Jiabao made a surprise visit to a Beijing university in December, where he told students: "Your difficulties are my difficulties, and if you are worried, then I am more worried than you."
Authorities have rushed out a raft of incentives to get companies to hire and promised subsidies to graduates who launch their own "innovation-based" start-ups.
Beijing's labor bureau has promised resident graduates will get "at least one job offer" in the coming months, while provincial governments have raised enrolments for post-graduate studies to keep students occupied for a couple of years.
The measures have done little for Chen Ying, a 25-year-old international trade graduate from northern Inner Mongolia who shares a poky room with another graduate in east Beijing.
After a fruitless year of looking for jobs, Chen has lowered the bar to consider reception and entry-level sales jobs. The problem is, so has everyone else, she said, sipping on a soft drink at a fast food restaurant.
"I have been to more than 30 interviews and made dozens more applications," said Chen, who remains jobless despite being highly motivated and able to speak English.
With parents helping her pay the rent, Chen counts herself as lucky. "I know graduates who are sleeping six to a room in this city," she said.
The government has been careful to link graduate employment woes to the global financial crisis, but the problem has been years in the making, analysts say.
"Kuo zhao," a government drive launched in 1998 to push students into higher education, has seen China's graduate base quadruple in a decade, outpacing the growth of skilled jobs to absorb them, and putting downward pressure on salaries.
"These new graduates have knocked the labor market out of balance," said Wang Zhiyong, a researcher with the China Academy of Social Sciences (CASS), a government think-tank.
"But there are still many low-level industries. Many companies say 'I don't need graduates, I can just train a migrant worker and save costs.' They don't actually need university students with high skills or qualifications to operate."
With skilled jobs at a premium, local media have reported graduates vying for cleaning and nanny positions. Students at teeming job fairs have said they would be prepared to take lower salaries and government posts in poor rural areas.
The gloom pervades online discussion boards, but anger is rare. A challenge to the government's authority is unlikely, according to Zhang Yi, deputy director of the Research Center for Labor and Social Security, within CASS.
"Graduates will not be included in the main groups which could threaten social stability as long as we keep economic growth at 8 percent," said Zhang, referring to the benchmark China regards as a minimum to absorb surplus labor.
In dusty Xiaojiahe, where slogans urge tenants to "love the country and abide by the law," the afternoons are peaceful before sunset ushers in a rowdy parade of migrant workers returning home to bunk beds as cheap as 260 yuan ($38) a month.
"Some graduate are at work. Those who aren't are out looking, or looking for jobs online," said an unemployed logistics graduate surnamed Zhao, slurping a 4 yuan bowl of hand-pulled noodles at an outdoor stall. Few graduates are idle.
Zhao, like many others, had given up on finding a good job in the current climate, and was hitting the books to prepare for an enrolment exam for a higher degree. It would leave little time for protests or demonstrations, were they ever to occur.
"Not only would it be dangerous to participate, it wouldn't change anything," Zhao said.
Additional reporting by Yu Le; Editing by Nick Macfie