The economic situation in mainland China continues to deteriorate, with more and more middle-class individuals experiencing overnight return to poverty. Many private business owners are struggling to stay afloat, facing closure and mounting debts. The Chinese Communist Party has rolled out various stimulus policies to boost consumption, aiming to strengthen the domestic market and stimulate the economy. However, the public has expressed anger towards these consumption-boosting policies, stating that they have no money in their pockets.
Recently, a blogger in Beijing posted an article titled “Middle-aged People Returning to Poverty Overnight.” In the post, the blogger shared the story of a couple in his neighborhood who used to work for a major internet company. They purchased a house for 5 million yuan in 2019 when property prices were high. Both of them are currently unemployed and are looking to sell the house to pay off their mortgage. The selling price is just over 3 million yuan, resulting in a net loss of 2 million yuan. Another individual mentioned was a finance professional who used to earn a million yuan annually and lived in a villa community. He was suddenly laid off, his full-time wife divorced him, and he was left with a huge mortgage debt.
The blogger lamented, “I don’t know how many people have returned to poverty overnight due to real estate and the stock market. But if this is destined to happen, how can we save ourselves and minimize the losses?”
A former executive from a Beijing education group, known as “Harbor Mom” on social media, has relocated to Hong Kong with her children. She shared the real-life experience of her friend, Mrs. W, on mainland Chinese social media. According to her, Mrs. W fell into the trap of the “Three Acts Leading to Middle-Class Poverty”—a nearly million yuan mortgage, a non-working spouse, and sending the second child to an international school.
“Harbor Mom” revealed that Mrs. W expressed her despair, saying, “I’m so devastated. My husband suddenly lost his job, my child’s international school tuition is cut off. The ‘Three Acts Leading to Middle-Class Poverty’ is indeed true.”
Mrs. W, originally a typical middle-class mother in a first-tier city, had a master’s degree and her husband worked in finance. Initially, both had decent salaries and a stable financial situation. They planned to send their daughter to a local international school, costing 230,000 yuan annually, with the plan for the child to study there until high school and then go abroad for undergraduate and postgraduate studies, totaling about 10 million yuan. However, when their daughter was in the fourth grade of primary school, Mrs. W’s husband lost his job, their business declined, their assets became unsustainable, and they couldn’t even afford the annual tuition of over 200,000 yuan.
“Harbor Mom” mentioned that there have been too many “treasure moms” like Mrs. W in recent years, all aspiring to provide their children with better opportunities. But the current environment, considering education costs, competition intensity, college admission rates, and job prospects, necessitates a reevaluation.
The “Three Acts Leading to Middle-Class Wealth Reset” was previously summarized by Chinese lawyer Zhang Yonghui, which includes having a nearly million yuan mortgage, a non-working spouse, and sending the second child to an international school. Additionally, there is a belief in the market about the “Five Acts Leading to Poverty,” involving impulsive investments in businesses, depleting assets to buy houses, elite education for children, guaranteeing for others, and blind investment in financial products.
Financial commentator Yang Guoying has previously written that nearly 90% of middle-class households in mainland China are small business owners and entrepreneurs. In the context of “financial whirling,” these middle-class families are facing the risk of falling back into poverty.
Following three years of pandemic-related lockdowns, the mainland Chinese economy continues to worsen. Private enterprises see no hope for economic recovery, leading to a rising number of bankruptcies. In 2024, the economic situation has become even more challenging, with bankrupt business owners burdened with debts, some choosing to end their lives, while others hope to start anew.
MoMo, a female boss from Henan born in 1989, found herself in debt amounting to 1.8 million yuan after her business failed. On November 8, she shared in a video message, “Today, I received a message from a respected elder brother, saying ‘When you see this message, I may no longer be in this world.’ He used to be in the catering business just like me, he owed a lot of debts due to the impact of recent years, but I did not expect him to take this path.”
She expressed, “I feel that life is incredibly fragile. Being in debt is not scary at all, as long as we stand up again, things will eventually get better. As long as we are alive, believe in ourselves, we will have a chance to turn things around.”
In a previous video last month, she disclosed another tragic incident. Her 37-year-old close friend faced severe depression after business failure and divorce, and eventually tragically took her own life by jumping from a building.
MoMo mentioned that she held a promissory note from this friend who borrowed 120,000 yuan from her two years ago for a business venture. “Now that she’s gone, I tear up this note. In death, debts are cleared. It’s just grief and regret left in my heart. Only by living can we have opportunities. Once a person is gone, everything ceases to exist.”
Another blogger, “Xiang Xiang Moving Forward with Debt,” shared a post saying she was born in 1988 and is nearly 37 years old with a 5-year-old child. Her company went bankrupt this year, her house is mortgaged, and she faces marriage breakdown, currently owing a direct debt of 3.7 million yuan.
She wrote that she went from riches to having nothing. She struggles to pay monthly rent and child support, with creditors knocking on her door every day. Her situation is so desperate that no one is willing to lend her even 1,000 yuan.
She narrated how in the early hours, she tried to seek refuge at her half-brother’s home, but he refused. When her brother received her call, he mentioned that due to her troubles, his wife and he were no longer on speaking terms, and he couldn’t even spare 1,000 yuan. He told her, “All the money is with your sister-in-law, even I can’t get 100 yuan of pocket money now. Your problems won’t help me in any way.”
Xiang Xiang recalled how she had lent 300,000 yuan to her brother when he was short on money for a house purchase. Tearfully, she expressed, “Once you don’t have money in this society, you realize you are worth less than a stray dog.”
A bankrupt business owner known as “Sister Wang” from Shandong, a woman born in the 1970s, previously owned dozens of restaurants, bars, and logistics companies at the peak of her career. Since the pandemic, she has been living in poverty and carrying a debt burden of 57 million yuan.
In a video message, she reflected on her journey from being a wealthy mogul to being deeply indebted. Over the past five years, the hardships she faced felt like an eternity, and the greatest suffering she experienced was carrying a massive debt load.
She shared, “I am now facing the verbal abuse and accusations of creditors. Who can understand the distress of these five merciless years? Now, with half a life left, isolated and wandering, I truly don’t know what to do. Feeling desolate and on the verge of collapse, gazing at this dimly lit metropolis, I have no idea where to go.”
“My ravaged appearance constantly reminds me that I cannot collapse, I must endure the struggle and believe in myself.”
There is a growing number of bosses like MoMo, Xiang Xiang, and Sister Wang who are burdened with massive debts. It’s not just these private enterprises that are facing bankruptcy; many once-renowned corporate giants are also going through tough times. According to incomplete statistics, approximately one-third of China’s super conglomerates have either gone bankrupt or been taken over, including the Tomorrow Group, HNA Group, China Zheshang Bank, China Minsheng Bank, Anbang Insurance Group, China Huarong Asset Management, China Evergrande Group, and Sinopec.
In response to the economic crisis threatening its rule, the Chinese Communist Party has introduced a series of measures to stimulate consumption, but the results have been underwhelming. Criticisms abound in the public domain, with many self-produced videos attacking these stimulative policies.
A recent video launched on Chinese social media platforms featured an animated version where an elderly man passionately criticized the experts suggesting that traveling would boost consumption. He sarcastically remarked, “How does traveling stimulate consumption? I can’t even afford basic expenses. Walking from the city to the suburbs without even reaching the highway, I run out of money. Is that stimulating enough?”
“Struggling to survive on 3,000 yuan, if you give me 30,000 yuan a month, even a rat would have to carry rice for me. How’s that for stimulation?”
“I am part of a disadvantaged group, not a stupid one. I have diverse ways of spending money, but very limited ways of earning it. You talk about stimulating consumption all day long. Why not stimulate income? I lack stimulation? I lack money!”
Yao Yuan Ye, a professor at St. Thomas University’s International Studies seminar in the United States, recently told a reporter that the current economic measures implemented by the CCP are merely attempts to cover up problems that cannot be solved.
Shen Ming Shi, the director of the National Security Institute at the Taiwan Institute for National Defense and Security Studies, also expressed to the same reporter that the CCP has run out of options to save the economy. Stimulatory stock market measures have trapped more people and failed to address real estate issues, let alone improve local government finances. “Therefore, this market-saving measure is not just a rocket, but a momentary firework that appears bright but quickly fades into darkness. Both domestically and internationally, the outlook is bleak.”
Senior economic commentator Wang He recently outlined three main reasons why consumer stimulation is challenging in China in an article titled “Why Can’t the CCP Boost Consumption?” These reasons include the excessively low proportion of disposable income among Chinese residents compared to GDP, a sharp increase in leverage in the household sector leading to excessive debt, and the significant wealth gap in China, with the majority being poor individuals.