Jane Wu is a perfect example of China’s economic woes and grim prospects.
The unemployed Beijing resident has had little luck in China’s competitive employment market since completing a graduate degree at University College London last year.
About one in five Chinese people, including Wu, are unemployed, with the unemployment rate for those aged 16 to 24 almost reaching 20% last month. She has been unable to find employment despite having a master’s degree from a reputable Western university.
For Wu, there are consequences.
The first is that she lacks the financial resources to engage in China’s consumer economy, at least not beyond purchasing necessities like tofu, eggs, and instant noodles, she stated.
“My budget is quite tight. “I simply lack the funds,” she stated in her almost flawless British English.
“I don’t see us ever having the financial resources to raise a child in Beijing, even if I marry a man with a good job and a good family.”Wu, Jane
One instance of a mass forced savings rate that is seriously harming China’s economy is Wu’s incapacity to participate actively in it. The nation’s leaders have long expressed a desire to tap into its massive consumer base and change the country’s development trajectory away from industry and exports.
However, the coronavirus pandemic and a real estate crisis in China have made that objective more difficult to achieve for the past ten years.
Due to the sharp decline in property values over the past three years, Wu’s parents, like many others in China, lost a startling portion of their assets. In a phone conversation with MarketWatch, she said, “I know they’d want to help me more, but times are tight even for them.”
According to government figures, real estate accounts for about 70% of Chinese household wealth, which is among the highest percentages in the world.
Wu’s situation goes beyond China’s present economic woes. She is already persuaded that having children is a dream that will probably remain out of her price range due to the difficulties she is facing and the “new normal” of slow growth anticipated for China’s economy.
“Even if I married a man with a good job and a good family, I don’t see us ever having the financial resources to raise a child in Beijing,” she stated.
This experience, which is widespread throughout the nation, is one of the ominous clouds accumulating over China’s social and economic advancement.
There is a demographic time bomb in China. In 2024, its population declined for the third consecutive year, setting it up for a “Japanification” in which the elderly greatly outnumber those of working age.
There is a demographic time bomb in China. For the third consecutive year, its population declined in 2024, setting it up for a “Japanification” in which the elderly dominate the working-age population, making it unable to fund social programs and placing an excessive burden on China’s large number of only children to care for their aging parents.
Additionally, China’s rapidly aging population is facing growing challenges of its own. The renowned Chinese Academy of Social Sciences has predicted that the nation’s ailing government pension system will run out of money by 2035.
Despite their repeated promises, Chinese policymakers have not done anything to assist the pension system, consumer confidence, or unemployment.
The decline has been accelerated by a loss of financial confidence. Millions of people are attempting to leave the nation with what little money they have left.
Long before President Xi Jinping took office and China’s economy began to grow more slowly, the super-rich had been shifting their money outside of the country for decades. There are indications that even middle-class Chinese people are now so concerned about the safety of their investments that they are looking for ways to transfer money outside, frequently to the United States, Australia, or the United Kingdom, but with much more difficulty.
For decades, the ultra-wealthy have been moving their money outside of China.
At the end of the pandemic, Xiaoli Xu received his degree from a southern California institution. The majority of her family’s savings were used to send her overseas in the hopes of a better life—one that would be more secure and free.
Their attention, however, shifted to obtaining her a green card before her H-1B nonimmigrant visa expired because China’s economy has obstinately refused to recover.
“The hope was to get a job, a green card and eventually buy a home in the U.S., even if it meant my parents selling their apartment [in China],” she told me by telephone.
Since that plan is stalling, she has started researching a Canadian program that enables Chinese people to obtain permanent residence after a few years of employment.
According to her, “my dad is the most worried” about their family’s financial situation in China. “He wants our savings out, and he seems willing to do anything to [make that happen].”
For Barron’s and BourseWatch, Tanner Brown covers China.
Additional Tanner Brown shipments:
The TikTok prohibition appears to be upheld by the Supreme Court. As “refugees,” users from the United States are escaping to another Chinese app.
In China, international brands have returned. However, domestic competition is fierce and the economy has cooled.
American businesses regain their lead over rival China in the Fortune Global 500 rankings.
According to experts, China’s economy requires more than this stimulus plan to recover from its current state of decline.
