This paper addresses the issue of students' employment expectations, considered a key factor in alleviating graduate unemployment in China. This empirical investigation surveyed students at two higher education institutions in Xi'an, Shaanxi Province, to analyze how expectations were changing. The results contrasted with earlier studies that reported unrealistically high expectations, discovering instead that most respondents were aware of the difficulties of finding work and were revising their expectations accordingly. The results also revealed important variations in attitude between higher vocational students and university undergraduates, and between urban and rural students. Overall, the paper contends that although students are becoming more realistic, the complexity of graduate unemployment will prevent this change in attitude from making a major improvement to the overall situation.