In recent times, on social platforms such as Douyin, WeChat Video Accounts, Kuaishou, a large number of young unemployed individuals have been voicing their grievances. Many enterprises have been closing down consecutively, leading to these individuals once again being trapped in the dilemma of “jobless and hopeless”. Many business owners have also publicly complained about decreasing orders, tight financial constraints, making it difficult for their companies to survive. These voices from the grassroots of society reflect the reality of China’s accelerating economic downturn.
China’s economy is currently going through an unprecedented period of slow growth, with some opinions even describing it as an “economic deceleration”. The National Bureau of Statistics of China announced on September 15th the economic data for August, showing a 3.4% year-on-year increase in the total retail sales of consumer goods, lower than July’s 3.7%, hitting a new low for the year. The China Fortune stated that the short-term rise in cultural tourism consumption was driven by summer travel. However, even with the implementation of the “trade-in old for new” policy, the growth rate of retail sales of goods continued to decline, dragging down overall consumption performance.
In Kunshan, Jiangsu Province, a business owner named Li Wei (pseudonym) who is engaged in electronic component manufacturing, told reporters that while his factory received some orders related to the “trade-in old for new” policy during the summer, it only lasted for two months. He mentioned, “After August, orders suddenly plummeted, with almost zero shipments for several weeks, leading to employees being forced to take leaves.” He mentioned that three processing factories near his plant have already closed down, some are selling their factory buildings, and local restaurants have put up rental notices due to lack of customers. He expressed his frustration saying, “The news says the economy is stabilizing and improving, but from what I see, it’s extremely bad. I don’t know if we can last until the end of the year. I heard the situation in Guangdong is even worse.”
According to the report titled “National Economic Performance in the First Three Quarters of 2025” released by the National Bureau of Statistics of China on October 8th, China’s GDP has grown by approximately 4.7% year-on-year in the first three quarters of this year, slightly higher than the second quarter but lower than the official set target of around “5%.” The report also indicates that the national fixed asset investment has grown by only 0.6% year-on-year, with the investment growth rate in the manufacturing industry sliding to 2.1%, hitting a new five-year low. According to the data from the Price Bureau of the National Bureau of Statistics, the Producer Price Index (PPI) has shown negative growth for the fifteenth consecutive month, reflecting the continuous squeeze on corporate profit margins.
On September 12th, the State Council of China held an executive meeting, once again emphasizing the need to “focus on prominent issues of enterprise concerns” and put forward slogans such as “sparking vitality in private investment”. However, such expressions have been seen repeatedly over the years, with very few reform measures being effectively implemented. Private enterprises remain lackluster in confidence, and uncertainties in financing environment and policies have not improved. In comparison to the political language in the meetings, the statements from business owners are more direct – they have already “lost hope.”
Beijing economist Shao Feng (pseudonym) pointed out that the economic downturn has spread to both foreign investment and private enterprises, with many private enterprises choosing to withdraw. He stated, “Official appeasement rhetoric is no longer able to regain trust,” and added, “In March, Premier Li Keqiang promised at the China Development High-Level Forum that the development environment for private economy would get better and better. However, the space has been squeezed to the limit. From March until now, closures and layoffs have spread all over the country.”
He further expressed that when business owners choose to “no longer harbor illusions,” the “old tricks” in the policy toolbox are also unlikely to reverse the decline. Whether China’s economy will fall into structural stagnation or still have a chance of recovery depends on the actual loosening of control and the rebuilding of market confidence. He said, “I’m not optimistic. Enterprises generally feel the pressure of shrinking external demand. The current environment is far worse than the 1990s. A friend close to the central leadership once told me: you won’t go far, let the next generation leave early.”
According to the Price Report of the National Bureau of Statistics in September, the CPI decreased by 0.4%, the PPI dropped by 2.9%, indicating a significant rise in deflationary pressure. Exports have also been hit, with data released by the General Administration of Customs on October 7th showing a 3.9% year-on-year increase in exports in September, narrowing the surplus, while import growth was only 1.3%, both lower than expected.
The latest forecast by the International Monetary Fund (IMF) predicts that the full-year GDP growth rate in China in 2025 will be around 4.8%, not only lower than the official target of about “5%”, but also far behind the high-speed growth rate of the past decade.
Interviewees in Shanghai and Guangdong pointed out that the departure of foreign capital and salary reductions for white-collar workers have become common occurrences. Some foreign companies have shifted their production lines to Vietnam and Indonesia, with one person mentioning, “The lights in the entire office building are off at night, and the café business is also gone.” Ms. Li, who used to work for a multinational company in the United States with an annual salary of 1.6 million yuan, is now unemployed as the company pulled out of Shanghai. She lamented, “I’m in distress. I bought three insurance policies in Hong Kong a few years ago, with an annual premium of 300,000 yuan. Now I have to notify the insurance company to cancel two policies. Who could have foreseen this outcome?”
Originally from Guizhou, Ms. Li studied in the United States in her early years. She joined a chemical company in Shanghai in 2016, managing Asia-Pacific business. Now, besides having to cancel her insurance policies, she also has to move out of her rented apartment. She mentioned, “The rent is almost 20,000 yuan now. I need to move to a smaller place to save some money.”
With the deepening macroeconomic pressure, the real estate and manufacturing industries are the first to face crises. According to Caixin statistics, leading real estate companies have been plunged into debt restructurings this year. Country Garden suffered a loss of approximately 19.1 billion yuan in the first half of the year, Shimao’s offshore debt restructuring amount exceeded 11 billion US dollars, and Road King Real Estate also applied for reorganization. Owners in the building materials and home furnishings industry chose to end their lives successively, and the industry described the situation as, “Houses are not selling, no one wants wooden boards, and there are no buyers for home furnishings.”
House Fang Yajun, the owner of a building materials factory in Baoding, Hebei, told reporters, “Last year, we were expanding the factory. This year, the factory remains idle. Half of the workers have left, and the rest only work a few days per month. My factory has been running for nearly 30 years, but it won’t last much longer. Oh, I should have left the country a few years ago.”
As the real estate market becomes stagnant, the manufacturing industry is also experiencing the ripple effects. On September 4th, Shenzhen’s foreign trade factory, Yongsheng Electric, which has been in business for 13 years, announced its closure. The company’s announcement stated that due to operational difficulties, the shareholders decided to dissolve the company in an early meeting on August 29th and formed a liquidation team. The announcement mentioned that the labor relationship between the company and its employees has been terminated immediately, and wages will be settled through bank transfers. This closure led to hundreds of employees losing their jobs.
A month ago, many netizens on WeChat and Douyin reported sudden production halts in factories and unreachable bosses. A netizen from Zhejiang said, “Starting tomorrow, we’re forced to pay social insurance premiums, and the boss simply vanished, reporting to the police was useless.” Another person pointed out that such events are often defined as debt disputes, and the police do not file cases, leaving employees to resort to the judicial process.
Beijing scholar, Song Tao (pseudonym), pointed out that China’s past prosperity was fundamentally a “false prosperity”. “China earned foreign exchange through export-oriented manufacturing, but at the same time, it exploited the wealth of laborers, investing in infrastructure, foreign aid, and military development, with parts of the funds ultimately ending up in the pocket of those in power.” He said, “The plummeting property prices, business closures, and restaurants shutting down stem from the fact that people have no money. The new mandatory social insurance regulations that came into effect on September 1st have further exposed the dilemma of the old economic model.”
Mr. Feng, an entrepreneur from Jiaxing, Zhejiang, mentioned that in just over a month, he heard that dozens of small and medium-sized factories in the area have closed down, with many of them being in operation for only a few years. He said, “Most of the closures this time are small businesses with assets of two to three million, some companies have not paid their employees’ wages for several months, and the owners are simply unable to pay social insurance. When workers report the situation to the police, they are told it’s a civil dispute, and they can only resort to legal procedures.”
He added that nowadays, many workers would rather not have social insurance and hope to be paid daily wages to sustain their livelihood. In Wenzhou and Taizhou, similar situations have arisen. Workers in a shoe-making factory in Wenling, Taizhou, revealed that the out-of-town owner has left, claiming to be “unable to afford social insurance”. The factory has only been able to pay 70% of the wages in the past six months, and the August wages remain unpaid, causing panic among the workers.
Mr. Bai, a foreign trade factory owner in Wenzhou, mentioned that the soft international demand has caused a reduction in orders, saying, “Some factories have reduced orders, some are directly overwhelmed by the social insurance costs.” He also mentioned that with the US imposing tariffs and canceling the tax exemption for small packages, the backlog at Yiwu warehouses has become severe. He mentioned, “This month, the US is also increasing charges on Chinese ships, our costs are higher, and now steel and aluminum products and hardware products exported to the US are stagnant.”
With the intertwined pressures of policies and declining external demand, the stagnation in the manufacturing industry is spreading. In Guangdong, the machinery industry is also facing challenges. In August, several machinery companies had to shut down. Industry insiders described the situation, “Equipment sales are stagnant, they can only be sold by weight, corridors of factories are filled with second-hand machinery, with no inquiries.”
In the last two weeks, real estate agents in Dongguan have been marketing a large number of emptied factory buildings on video websites, mostly selling entire buildings with prices ranging from several million to twenty million yuan. This implies that Dongguan, once known as the “world’s factory”, is no longer bustling, replaced by the revival of massage parlors and nightclubs. Taiwanese businessman, Mr. Huang, said, “There are 70% fewer factories in Dongguan than ten years ago, and workers have also left, so the factory buildings are vacant. Those nightclubs don’t have many customers either, and they will eventually close too.”
Huaxun Electronics Company in Huizhou announced the cessation of production for liquidation on August 31, ending its 27 years of operation. Another company, Kaiyi Paper Products, closed in early August, with around 300 employees fighting for their rights. According to one of the employees, the monthly social insurance costs for the company reached 500,000 yuan, while the monthly profit was only around 200,000 yuan, making it unsustainable after the implementation of the new regulations.
In a photovoltaic factory in Yancheng, Jiangsu Province, an employee named Liu Qiang (pseudonym) said, “Last year, we were on a three-shift schedule, this year we can’t even fill the day shift.” Pointing at the empty workshop, he mentioned, “Everyone is afraid that they might be the next one to be laid off.” Several photovoltaic companies have relocated their production lines to India or Saudi Arabia to avoid trade barriers. A senior executive from JinkoSolar admitted, “If we don’t leave now, there would be no market left.”
Apart from the manufacturing industry, the wave of layoffs has spread to other sectors as well. A garment factory owner in Dongguan said, “Banks are reluctant to lend, the risks are too high.” Wang Qiang, a worker at a manufacturing plant in a central province, said, “Wages are often delayed, we only work when there are orders, otherwise, we’re put on hold.” Chen Huimin, a brand manager in Beijing, mentioned, “Budgets have been halved, annual bonuses have been canceled, even promotional posters have to be meticulously re-examined.” She admitted that the morale in the company has hit rock bottom.
According to the People’s Bank of China’s survey report on urban depositors in the third quarter, the consumer willingness index dropped to 86.5, and the entrepreneur confidence index was at 101.2, both lower than pre-pandemic levels. A survey by the National Financial and Development Laboratory showed that the proportion of savers has reached a ten-year high, with residents’ deposits increasing by nearly 10 trillion yuan annually.
In response, Shanghai housewife Liu Ying said, “The mortgage is 8,000, tutoring fees are 3,000, I dare not spend recklessly. Things have gotten tighter after the pandemic.” The contraction in household spending vividly illustrates the “sluggish consumption” in the macro data.
At the policy level, the People’s Bank of China announced on October 2nd a reduction in the reserve requirement ratio by 0.25 percentage points, releasing about 500 billion yuan in liquidity. Local governments are boosting infrastructure construction, and the new energy and semiconductor industries continue to receive policy support. An analyst from Peking University elaborated, “China is undergoing a triple overlay of ‘deleveraging, capacity reduction, globalization retreat’, short-term pains are inevitable.”
The World Bank and the IMF predict that China’s growth will be around 4.5% to 4.8% in 2025, with Goldman Sachs and UBS revising down their expectations, suggesting that consumption recovery is weaker than anticipated, and real estate adjustments may prolong. In comparison, the US maintains a growth rate of about 2% despite high-interest rates, Europe remains weak but not in recession, and the economic situation in China seems to have entered the “express lane of decline.”
Several scholars interviewed lastly pointed out that the current economic challenges in China are not reversible by short-term policies, and the real challenges lie in “rebuilding trust” and “restructuring direction”. If decision-makers persist in using administrative means to substitute market reforms, the “deceleration” may turn into “stagnation”.
The future trajectory of China’s economy remains shrouded in uncertainty.