China’s Economic Struggles Cast Shadow Over National Day #

As China prepares to celebrate the 75th anniversary of its founding, the country faces significant economic challenges that have dampened the mood among its citizens.

The past year has seen widespread economic difficulties affecting various segments of society:

• Young graduates struggle to find employment
• White-collar professionals face pay cuts and job losses
• Entrepreneurs grapple with financing and debt issues
• Middle-class families see wealth diminish due to falling housing prices
• Wealthy individuals seek to move money out of the country

This economic malaise has led to a pessimistic outlook, with some describing the current period as “the garbage time of history” - a stark contrast to the optimism of just five years ago when discussions centered on China potentially overtaking the US as the world’s largest economy.

In response to mounting economic pressures, Chinese leadership has recently announced a series of stimulus measures:

• The central bank introduced policies to increase lending and reduce borrowing costs
• Cash handouts for disadvantaged citizens and subsidies for recent graduates were announced
• The ruling party’s Politburo pledged to boost fiscal spending and address issues in the property market

These measures led to a significant rally in Chinese stock markets, with blue-chip stocks experiencing their largest single-week gain in nearly 16 years. However, economists caution that reversing the economic downturn will require more substantial efforts.

Key challenges facing the Chinese economy include:

1. A slumping housing market, which has led to massive wealth loss for households
2. The need for fundamental reforms to shift towards a consumption-led growth model
3. Demographic issues, including a shrinking population and low birth rates
4. High youth unemployment, reaching 18.8% in August

The economic slowdown poses a challenge to the Communist Party’s legitimacy, which has long been based on delivering economic growth. While the government has emphasized nationalism as an alternative source of legitimacy, it still seeks to restore confidence in the economy.

As China marks its National Day, the contrast between current economic realities and past optimism highlights the significant challenges facing the country’s leadership in the coming years.