If their government suddenlycompletedDue to strict Covid measures in December, many Chinese expected a strong recovery in sluggish demand. Eight months later, China is facing a wave of bad news: the record breakingyouth unemployment, deepreal estate crisis, stagnationexpenditure, evenDeflation.
For many Chinese, this is a shock, accustomed to a growing economy and rising living standards. Now they are struggling with slow business and shrinking personal wealth.
As I have done for years, I've talked to a dozen business owners and consumers, and I can say: with youConfidenceThe future of the economy and the country is in a difficult situation. If they had hoped for recovery, that hope had been extinguished. They fear that this is the beginning of something they cannot imagine and they fear that the government has no solution. The bad news just keeps on coming.
"The scariest thing is that everyone around me doesn't know what to do next," said Richard Li, owner of an auto parts warehouse. "I used to believe that our country would get better and better."
In the first half of 2023, Mr Li's company's revenue fell 15 per cent year-on-year as the city where he lives - along with more than 10 million other people - has been locked down for weeks.
He discovered that other companies, like his, were also struggling. Some of its customers, garages, even closed their doors as car owners cut back on spending.
Mr. Lee had four stores and closed two of them. It laid off two-thirds of its employees and stopped investing in new products. He also rarely ate out with friends. Lacking cash, he tried to sell the condo he bought as part of the investment in 2020. However, there were few inquiries, even after the price was reduced from $500,000 to $400,000.
People like Mr. Li are finding it increasingly difficult to rely on the Chinese government to know what is happening in the economy. Data published years ago has been hidden. Distribution stopped last weekYouth unemployment rateafter figures peaked at 21.3% in June.
But the mass of official data the government was about to release for July was pretty bad.
consumer prices in ChinaSectionlast month for the first time in two years. Expansion of Chinese banks$47.5 billionThe number of new renminbi loans fell by 89%. compared to June, that is half less than a year earlier. house sales related to movie setsSectionafter falling by almost a quarter in the first seven months of the year by 6.5%. In a country where three-fifths of household wealth is related to real estate, the decline is alarming.
The fear is so great that people are taking to social media site Xiaohongshu to post amulets they believe can help them sell their homes.
China has been mired in deflation after the government's draconian "zero Covid" policy severely suppressed consumption and economic activity last year. Chengang Xu,A Stanford University economist explained why deflation can be harmful.
"The best-case scenario is that everyone expects prices to fall further, so they continue to expect prices to fall further," he said. "The worst case scenario is that people are very scared and very anxious." Fear for their jobs or business survival will lead them to save more and spend less, pushing the economy further into the deflation trap, he said.
In the face of great fear, people are already saving more and spending less.
Cob Liu, founder of an education start-up in a major city in southwestern China, said its sales had stagnated this year, a setback for a company that had been growing at a rate of 40 percent a year. Mr. Liu, 30, has about $1.5 million in cash, but is determined to keep his monthly expenses to around $800, half of which goes to rent.
He'll keep his five-year-old Toyota Corolla and won't be buying real estate anytime soon. In 2019, he bought apartments in two complexes, and the developers of both complexes stopped construction due to lack of money. This isnightmarethat hundreds of thousands, if not millions, of Chinese have survived the abrupt end of the property boom.
Liu believes the collapse of the Chinese economy could last for years. He sold all his holdings in mainland Chinese stocks this year and said he would not touch Chinese stocks, even if they were listed in New York or Hong Kong.
Boris Dai, 44, is a commercial real estate consultant in Beijing who earned just under $15,000 in the first six months of this year. That's half of what he earned during the pandemic and less than 15 percent of his previous earnings. His second source of income - the office space he rents - disappeared when his tenant closed six months ago.
"I can only lie down," said Mr. Dye, using the phrase to describe a break from tireless work. "I have no expectations for the future." He converted his SUV into a bedroom so he and his wife could save on hotel expenses while traveling.
Even prosperous entrepreneurs hesitate to take loans because of uncertain prospects.
Mark Fu, founder of a financial advisory firm with offices in Chengdu and Hong Kong, said his company has seen a boom this year. He explained that many wealthy Chinese realized this during the pandemicMoney could not give them security or dignityand they turned to him for help in moving their financial assets out of China. Banks offered him low-interest business loans, but he was reluctant to take on debt. Instead of expanding, he reduced his workforce from 12 to 10 by downsizing.
He said he was shocked by the government's actions against one of themIndustry After butduring a pandemic. He said he believed that if he worked hard, he would be successful. Now he fears that the way he runs his business no longer matters.
"Will the government kill you all in one fell swoop?" He asked, "Or do I let you earn some money?" He also has an apartment that he couldn't sell.
The mood on social media has become so gloomy that aCommentSecurities Daily's official publication requested the removal of posts speculating about impending trouble. The rumors have sparked market volatility, the article said, citing headlines such as "China's version of Lehman Brothers is coming!" and "A brokerage firm holds a 'dark hour' conference call."
People are desperate because they cannot imagine how China can escape the downward spiral. They think this is what causes the problemsideologyby Xi Jinping, China's supreme leader, who apparently doesI don't like the private sectorindisassembledElements of the market economy that ensured China's economic success.
At the age of 35, Andy Wang quit his bank job this year to prepare to apply for postgraduate studies in Australia. It was postponed last fall when the list of new party leaders, all of whom were protégés of Xi, was announced. After that, the country's ability to fix was lost," he said.
His parents are rich, but he is pessimistic that he will have the same opportunities they once had. "I don't see any way to make money in this country," he said. “I'm not even sure I can maintain my current standard of living. I could only fight to survive."
Li YuanwritesColumn New New World, which focuses on the intersection of technology, business and politics in China and across Asia. More about Li Yuan
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