China’s economy continues to face challenges, with reports of major setbacks emerging. Renowned service website “58 Tongcheng” has announced significant layoffs, while Nezha Auto, a representative in the new energy vehicle sector, has filed for bankruptcy. Experts analyze that China’s economy is in a severe downturn, with no sign of reaching the bottom yet. The situation has raised concerns that, should the vast population of migrant workers find themselves without work or land, China may witness a potential uprising akin to the peasant rebellion led by Li Zicheng.
The well-known lifestyle service platform in China, “58 Tongcheng,” recently initiated large-scale layoffs without prior warning, affecting nearly 20% to 30% of its workforce, approximately thousands of employees mainly from the technical and local service departments. This news has become a hot topic on Chinese social media platforms.
“58 Tongcheng” is a popular platform in mainland China for finding housing, job opportunities, and domestic services.
Dr. Sun Guoxiang, a professor at the Department of International Affairs and Business at Nanhua University in Taiwan, explained to Epoch Times that the overall economic downturn in mainland China has led to a decrease in consumer demand. Platforms like “58 Tongcheng,” which rely on online services and recruitment, are facing reduced business prospects due to diminishing hiring demands from companies and lower consumer spending.
President Jiang Pinchao of the American financial expansion real estate investment company pointed out that the decline of such service platforms is a severe consequence of the bankruptcy of Chinese real estate enterprises and the shrinking property market.
He stated that a large number of migrant workers arrived in cities to participate in construction activities. These workers initially relied on “58 Tongcheng” to help them find housing in urban areas. However, with numerous Chinese real estate companies going bankrupt and the property market catastrophically shrinking, these workers found themselves returning to rural areas without jobs. Consequently, “58 Tongcheng” lost a significant portion of its rental customer base. Many urban residents, facing survival pressures, have also reduced spending, resulting in them maintaining their current living conditions instead of upgrading to better housing.
Jiang Pinchao noted that the sluggish real estate market has affected numerous related enterprises, with the contraction in business for platforms like “58 Tongcheng” being a typical example.
Chinese media reported on June 19 that Nezha Auto, now renamed as Hezhong New Energy Automobile Co., Ltd., had filed for bankruptcy with 1 billion shares frozen. This news also generated a buzz on social media platforms.
Nezha Auto was previously considered a shining star in the Chinese new energy vehicle industry.
Dr. Sun Guoxiang mentioned that the intense competition in the Chinese automobile market, frequent price wars, and squeezed profit margins have made it challenging for enterprises lacking core competencies or financial strength to sustain operations.
Jiang Pinchao told Epoch Times that Nezha Auto was a typical example of a “low-price competition” new energy vehicle company in China. Due to such competition, Chinese new energy vehicles faced resistance in the European market, hindering their export. This, in turn, compelled Chinese automakers to focus on seizing the domestic market, with leading companies like BYD continuously reducing prices to boost sales.
He emphasized that enterprises like Nezha, although somewhat renowned in the past, were unable to compete effectively with larger enterprises. In the competitive landscape, state-owned enterprises often receive protection and subsidies, leading to the inevitable trend of bankruptcy for private enterprises.
Jiang Pinchao noted that especially during Xi Jinping’s shift towards supporting state-owned enterprises over private ones, national policies and funding have been tilted in favor of state-owned companies, making it difficult for private enterprises to survive.
He added that real estate and automobiles are two crucial pillars of the Chinese economy, with real estate having historically accounted for 30% of China’s GDP. If real estate fails to recover, China’s economic revival will face significant challenges, particularly with the decline in the demographic dividend making it hard for the real estate sector to rebound.
“In the new energy vehicle market, they have just started falling apart, and we can expect to see a wave of further collapses. China’s economy has already plunged into a deep depression, but it has not hit rock bottom yet,” Jiang Pinchao remarked.
Dr. Sun Guoxiang mentioned that the contraction of real estate and automobile enterprises not only leads to increased unemployment but also triggers a negative chain reaction affecting related industries such as construction, building materials, automobiles, components, advertising, and human resources. This, in turn, suppresses consumption, squeezes domestic demand, and fuels a vicious cycle, leaving the mainland Chinese economy in a state of “deep recession.”
Professor Xie Tian from the H.C. School of Business at the University of South Carolina expressed to Epoch Times that witnessing the continuous collapses in real estate and automotive sectors, along with the shrinking of major service platforms, indicates that more bankruptcies are likely to occur. He believes that the deep winter of the Chinese economy is far from over and is only going to get colder.
He stated that severe recessions are typically accompanied by high unemployment rates and lead to a “complete collapse of the economy and society.” However, due to the Chinese Communist Party’s covering up of economic challenges, the true economic data is not easily accessible. Nevertheless, he is convinced that China’s economy is currently experiencing a severe downturn, which is likely on the path towards a major depression.
Jiang Pinchao remarked that if the decline in the Chinese economy continues, the most vulnerable to suffer are the lowest-income groups in society, particularly farmers and migrant workers.
He pointed out that many farmers responded to the government’s call to work in cities. Now, with urban jobs disappearing, they are forced to return to rural areas where they have no land to cultivate. This predicament underscores the hardship faced by this group of people as they struggle to adapt.
Jiang Pinchao highlighted a significant, looming issue in Chinese society and economy – the “three rural issues.” This term refers to challenges concerning rural areas, agriculture, and farmers.
He emphasized that if the Chinese economy significantly worsens, government policies would continue to lean towards supporting urban areas, ultimately resulting in the immense suffering of farmers.
“There will be many problems in China in the future, and the possibility of peasant uprisings like Li Zicheng’s rebellion in history exists because the largest population in China remains farmers,” he added.