The Education Ministry said a record 6.99 million students will leave colleges and universities this year, up 2.8 percent from 2012. However, the increase comes at a time when employers are cutting down on recruitment.
The number of jobs for new hires has dropped about 15 percent from last year amid slowing economic growth in China, Xinhua News Agency reported.
"The shrinking job market is the result of the sluggish world economy and tempered domestic growth," said Yang Lin, director of the career guidance center of Beijing Technology and Business University.
Yang said new openings in many large state-owned enterprises also have declined dramatically this year.
The report quoted the case of Yi Feng, 22, who graduated with a degree in chemistry from Jiangxi North University in Jiangxi province. He decided to join the army after sending out more than 110 job applications.
"Joining the army is not a bad option for me. It has relieved my stress to find a job and will probably make me more competitive," he said.
The situation has become grave enough to draw the attention of the country's leadership, the report said. Chinese President Xi Jinping recently called for efforts to help the graduates find employment.
The problem is further complicated as the new graduates seek employment only in civil service, public institution or state-run companies where they see better growth prospects than in small and medium-size companies, the report said.
"We're keen to hire college students with an education background in marketing, advertising or human resources, but it's really difficult to attract them," said the manager of a small private company based in eastern Shandong province.