China’s economy is in a slump, with weak consumer demand. The people lack confidence in the future and have lost their spirits.
According to a report by French newspaper “Le Monde,” since the end of the COVID-19 crisis, China has been unable to shake off its economic downturn. Despite authorities taking some stimulus measures, domestic consumption remains stagnant, with China teetering on the edge of deflation. Why have the Chinese people lost confidence?
The report’s correspondent visited Shenzhen to conduct on-the-ground interviews.
It was noted that both store employees and restaurant owners alike generally expressed that business was slow. Store employees mentioned that there were plenty of people coming in to browse, but few were actually making purchases. Restaurant owners remarked that there were fewer customers, and they were more cautious when ordering.
The article pondered on what exactly has happened in China to lead to the loss of spirit among its people. Can China regain its confidence and rise again? These questions trouble every Chinese household and will play a pivotal role in the healthy development of the global economy in 2025.
The article pointed out that for the Chinese, difficulties began with the COVID-19 pandemic. Chinese people spent three years in a state of isolation due to the health crisis. Concurrently, the Chinese government cracked down on the real estate industry’s excessive debt. In August 2020, authorities set a debt “red line” for developers. Unable to refinance, industry giant Evergrande collapsed in 2021, while other real estate enterprises found themselves in a precarious situation. Real estate is the preferred investment for Chinese households, and the three-year real estate market crisis severely damaged the economic strength of Chinese families.
Additionally, China’s household registration system restricts rural populations from enjoying public services in major cities. Completely abolishing the “hukou” system would help persuade former rural families to buy houses, kickstarting the real estate sector. However, mega-cities like Beijing and Shanghai are cautious about such reforms.
The real estate crisis also shook the budgets of various provinces and cities in China. During the rapid development phase, the financial resources of each province and city came from the transfer of rural land to real estate developers in the urbanization process. The funds generated from these transactions were used to construct new communities, which in turn spurred the construction of new roads and bridges. The collapse of the real estate market severed this source of income.
Authorities are also hesitant to provide extensive assistance to real estate developers. Investments that were originally earmarked for real estate have now shifted towards manufacturing.
The article noted that authorities in Beijing seem to understand that the Chinese people have lost confidence. The extreme control policies implemented by the CCP during the three-year COVID-19 period not only severely damaged the Chinese economy but also increased dissatisfaction among the Chinese towards the government, leaving them without a clear vision of the future.
The CEO of Hongbin Biotechnology (Shenzhen) Co., Ltd expressed in an article in May last year that China harbors a widespread social and spiritual dilemma. People generally feel oppressed, lack confidence and personality, and the overall societal spirit lacks vitality.
He believes that one of the reasons is the intense competition in Chinese society, leading to immense pressure. People face fierce competition in various aspects from academics to work, which could make them more anxious and repressed, lacking confidence and individuality.
Another major reason is the government’s censorship system, causing people to feel fearful and repressed about expressing themselves freely.
The article concluded by stating that Chinese society is facing these challenges. The hope is for a vibrant spirit to emerge in Chinese society in the future.