China’s economy is on a downward trend, with domestic demand continuing to languish. Even the Chinese Communist Party (CCP) official media has had to concede that the current economic situation faces four major challenges, including a weak domestic demand. Many voices from the mainland indicate that the common people are truly running out of money.
In an article published on November 11 in the CCP official newspaper People’s Daily, it mentioned that China’s current economy is facing four major challenges, including stabilizing foreign trade and increasing pressure from foreign investment; weak domestic demand, with residents’ consumption ability and willingness not strong, making investment stabilization difficult, and the need to further stimulate private investment.
Some enterprises are struggling to operate due to soft sales, declining efficiency, weakening market expectations, and various risks in certain sectors. Some regions face difficulties in managing debts, grassroots finances are strained, some companies are downsizing or cutting wages, and the employment pressure has increased for young groups like college graduates, while urban residents’ income growth is slowing down.
In October, China’s Consumer Price Index (CPI) rose by 0.3% year-on-year, slowing down from the 0.4% increase in September and hitting the lowest level since June, which was below the forecasted 0.4% increase by Reuters. Excluding the more volatile food and fuel prices, the core inflation rate in October increased by 0.2%.
The CCP introduced a comprehensive set of policies at the end of September to stimulate the economy, but inflation has remained close to zero, indicating that domestic demand is still weak.
On mainland social media, many netizens express that the common people truly have no money left. They have summarized several typical phenomena:
Firstly, it’s becoming increasingly difficult for food stores to do business. Shopping malls used to be bustling with people, but now they resemble ghost towns. Sometimes, there are more staff than customers, and it’s common to see “for lease” signs hanging on the storefront after only three to four months.
“Why are ‘hot’ shops being leased out so frequently? It’s because the pockets of ordinary people are truly empty. Even those who have some money are holding onto it tightly and not spending. Prices are rising faster than wages, and mortgages and car loans are suffocating. Additionally, with the increasing prevalence of e-commerce, it’s especially tough for food stores.”
Secondly, young people are hesitant to have children. It’s not that they don’t want children but rather they can’t afford them. Children are seen as “money pits,” from diapers and formula to education and extracurricular classes, every aspect requires a significant amount of money. With salary cuts and poor job prospects, young people find it challenging just to sustain themselves, let alone think about starting a family. This has led to an aging population and a shortage of future labor force that the society cannot bear.
Thirdly, people are saving money desperately and reducing their desire to consume. What used to be lavish spending has turned into budgeting every penny. Saving money has become a new trend.
“People used to go out for dining and entertainment on weekends, but now they choose to stay home and watch TV shows. Due to concerns about the future, everyone is trying to save every penny. If nobody is spending, how can the economy grow? And without economic growth, where will the income come from? With no income, how can people keep spending? It’s a vicious cycle.”
“These phenomena reflect the wealth gap and structural imbalances in the society, revealing deep-rooted contradictions in the Chinese economy. As ordinary individuals, we must enhance our own risk resistance because in this country, the only reliable support we have is ourselves.”
A blogger named “Universe1O” recently pointed out, “Where did the people’s money go? Many families have emptied their life savings to buy houses, placing immense pressure on the property market, even withdrawing grandparents’ retirement funds to pay for the down payment of the properties.
However, there are numerous incomplete housing complexes in many cities across the country, which have tied up significant amounts of capital. Many developers are heavily indebted, and a vast amount of money is trapped in the real estate market. The families who bought these houses have lost everything – all locked up in the property market.
“In recent years, various departments have been advocating for boosting consumption and domestic demand. Why hasn’t domestic demand picked up? The main issue is that everyone’s money is invested in the property market. Some argue that real estate is the biggest evil, and looking at the current situation, there is some truth to that.”
He noted that there are still many vacant housing complexes that cannot be sold. Those who have already paid for their houses are unable to obtain them. Consequently, mortgage defaults, and even collective defaults, are occurring frequently. This situation is not hypothetical but a stark reality. The prices of these houses range from million to tens of millions in major cities and smaller towns.
“With an increasing number of unemployed individuals, a wave of unemployment is sweeping across the nation. The funds poured into the real estate market comprise over half of all households’ assets. Moreover, the inventory and listings of second-hand homes are surging rapidly. With new properties unsold and a surge in second-hand listings, it’s difficult to sell houses. The inability to liquidate assets in a timely manner has become the biggest challenge for ordinary people.”