Economists in mainland China have pointed out that the middle class has collapsed, greatly impacting the country’s overall economy. The downturn in the real estate industry is the main cause of China’s economic woes. The middle class is burdened with massive mortgage pressures and faces the risk of unemployment. Domestic demand in China is weak, and official attempts to stimulate middle-class consumption have failed.
Chief economist at Dongbei Securities, Fu Peng, recently spoke at an internal event at HSBC Group, highlighting the collapse of the middle class and the grim economic outlook for China due to demographic changes and the collapse of the middle class. He emphasized the significant impact of the middle class shrinking on the overall economy.
Despite Fu Peng’s speeches being repeatedly deleted, the content has continued to spread widely. He pointed out that economic issues have already become apparent in recent years through data and sample surveys. Initially felt by lower-income groups like ride-hailing drivers and food delivery workers, the pressure has gradually spread to the middle class. This year, the rapid contraction of the middle class is a particularly prominent issue.
Fu Peng analyzed that the sudden emergence of 20 million ride-hailing drivers this year, many of whom were originally part of the middle class, has directly led to a continuous decline in total demand. He stressed that since 2019, China’s total demand has been decreasing, predating the impact of the pandemic and external demand collapse. This indicates that even during the era of globalization benefits, China’s effective demand has turned negative for the first time, showing a significant decrease in middle-class consumption willingness.
Fu Peng’s revelations not only shed light on the complex issues facing the Chinese economy but also spurred deep reflections on policy responses and future development.
Another internet-famous economic expert from mainland China, Chief Economist Gao Shanwen of Guotou Securities, shared his views on the macroeconomy and market at the Guotou Securities 2025 Investment Strategy Conference.
Gao Shanwen stated that China’s real estate market has been in a significant decline since August 2020, surpassing three years, making it one of the main reasons for the current economic difficulties. He pointed out that for young people, income expectations have been drastically reduced, job opportunities are hard to come by, leading to cutting back on expenses like turning off lights and eating noodles frugally. He observed a sense of desolation among young and middle-aged individuals.
According to the “Blue Book of Society,” jointly edited by institutions like the Chinese Academy of Social Sciences and its Sociology Research Institute, the middle class is defined as households with annual incomes between 100,000 and 500,000 RMB.
The disappearance of the middle class in mainland China has garnered attention since 2022. A blogger shared a story about a piano factory owner who mentioned the collapse of the piano industry, with many factories closing and pianos being sold at significantly reduced prices compared to before.
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