Business
Falling property prices, weak consumer demand and job uncertainty are putting sustained pressure on household finances, even as official data points to stability. (AI Generated Image)
By several headline measures, China’s economy appears to be holding up. Exports remain strong, and the country has made notable advances in artificial intelligence, electric vehicles and other high-tech sectors backed by state support.
Yet for many ordinary Chinese citizens, the economic reality feels far less encouraging. Falling property prices, weak consumer demand and job uncertainty are putting sustained pressure on household finances, even as official data points to stability, said a report by The Business Standard.
China’s Economy Looks Resilient on Paper, but Everyday Life Tells a Different Story
By several headline measures, China’s economy appears to be holding up. Exports remain strong, and the country has made notable advances in artificial intelligence, electric vehicles and other high-tech sectors backed by state support.
Yet for many ordinary Chinese citizens, the economic reality feels far less encouraging. Falling property prices, weak consumer demand and job uncertainty are putting sustained pressure on household finances, even as official data points to stability.
Consumers feel the squeeze
Small business owners say spending has slowed sharply as disposable incomes shrink. In Beijing, billiards hall owner Xiao Feng says business has become extremely difficult, with customers cutting back on leisure spending.
After accounting for rent, labour and utility costs, Xiao says he is barely breaking even. Once a major contributor to his family’s income, he has earned almost nothing for the past six months. His wife, a nurse with a stable salary, has now become the household’s main breadwinner.
A similar picture is emerging across sectors. Commercial property agent Zhang Xiaoze says his annual income has collapsed from millions of yuan during the mid-2010s boom to a fraction of that today, as companies relocate out of Beijing and demand weakens. Like many others, he has had to dip into savings to support his family.
Two sides of the economy
China’s leadership is pushing a transition toward what it calls “high-quality growth,” focusing on domestic innovation, advanced manufacturing and a consumption-driven model. This marks a shift away from decades of heavy reliance on infrastructure, property development and export-led manufacturing.
Exports, however, remain a crucial pillar. In the first 11 months of 2025, China’s exports hit a record $3.4 trillion, helped by stronger shipments to Southeast Asia and Europe that offset weaker demand from the United States.
Economists describe the current phase as a major transition. While investment in AI and technology has boosted share prices, the benefits have not filtered down to most households, leaving many people feeling disconnected from the official growth narrative.
Growth figures under question
Some analysts argue that China’s true growth rate may be significantly lower than official numbers suggest. Retail sales growth slowed to 1.3 per cent in November, while fixed-asset investment declined over the first 11 months of the year. Household income growth has also lagged pre-pandemic levels, with property-related income all but disappearing.
While institutions such as the IMF and major banks have raised their growth forecasts closer to the official 5 per cent target, other estimates are far more conservative, placing actual growth closer to 3 per cent or even lower.
Property slump weighs heavily
The prolonged downturn in the property market remains a major drag on confidence. Home prices have fallen more than 20 per cent since their 2021 peak, eroding household wealth and dampening spending.
New home sales and property investment both declined sharply in 2025. For homeowners like Xiao, the loss in property value has delayed major purchases and forced cutbacks on expenses such as private tutoring for children.
Educators and service providers are also feeling the impact. Tutors report fewer students and lower incomes as families shift to cheaper group classes or stop spending altogether.
Slower growth ahead
Most forecasts point to slower economic growth in 2026 and beyond. Economists say incremental policy tweaks are unlikely to revive confidence while deeper structural reforms remain politically difficult.
Excess capacity in sectors such as autos, steel and consumer goods continues to depress prices and profits. At the same time, China’s expanding trade surplus risks fuelling global trade tensions that could further weigh on exports.
For many small business owners, the outlook remains bleak. With customers cutting back on travel and discretionary spending, some say they may shut down entirely if conditions do not improve soon.
Despite official optimism and pockets of technological progress, China’s economic transition is proving painful at the grassroots level — highlighting a widening gap between macro resilience and everyday hardship.
Small business owners say spending has slowed sharply as disposable incomes shrink. In Beijing, billiards hall owner Xiao Feng says business has become extremely difficult, with customers cutting back on leisure spending.
After accounting for rent, labour and utility costs, Xiao says he is barely breaking even. Once a major contributor to his family’s income, he has earned almost nothing for the past six months. His wife, a nurse with a stable salary, has now become the household’s main breadwinner.
A similar picture is emerging across sectors. Commercial property agent Zhang Xiaoze says his annual income has collapsed from millions of yuan during the mid-2010s boom to a fraction of that today, as companies relocate out of Beijing and demand weakens. Like many others, he has had to dip into savings to support his family.
Two sides of the economy
China’s leadership is pushing a transition toward what it calls “high-quality growth,” focusing on domestic innovation, advanced manufacturing and a consumption-driven model. This marks a shift away from decades of heavy reliance on infrastructure, property development and export-led manufacturing.
Exports, however, remain a crucial pillar. In the first 11 months of 2025, China’s exports hit a record $3.4 trillion, helped by stronger shipments to Southeast Asia and Europe that offset weaker demand from the United States.
Economists describe the current phase as a major transition. While investment in AI and technology has boosted share prices, the benefits have not filtered down to most households, leaving many people feeling disconnected from the official growth narrative.
Growth figures under question
Some analysts argue that China’s true growth rate may be significantly lower than official numbers suggest. Retail sales growth slowed to 1.3 per cent in November, while fixed-asset investment declined over the first 11 months of the year. Household income growth has also lagged pre-pandemic levels, with property-related income all but disappearing.
While institutions such as the IMF and major banks have raised their growth forecasts closer to the official 5 per cent target, other estimates are far more conservative, placing actual growth closer to 3 per cent or even lower.
Property slump weighs heavily
The prolonged downturn in the property market remains a major drag on confidence. Home prices have fallen more than 20 per cent since their 2021 peak, eroding household wealth and dampening spending.
New home sales and property investment both declined sharply in 2025. For homeowners like Xiao, the loss in property value has delayed major purchases and forced cutbacks on expenses such as private tutoring for children.
Educators and service providers are also feeling the impact. Tutors report fewer students and lower incomes as families shift to cheaper group classes or stop spending altogether.
Slower growth ahead
Most forecasts point to slower economic growth in 2026 and beyond. Economists say incremental policy tweaks are unlikely to revive confidence while deeper structural reforms remain politically difficult.
Excess capacity in sectors such as autos, steel and consumer goods continues to depress prices and profits. At the same time, China’s expanding trade surplus risks fuelling global trade tensions that could further weigh on exports.
For many small business owners, the outlook remains bleak. With customers cutting back on travel and discretionary spending, some say they may shut down entirely if conditions do not improve soon.
Despite official optimism and pockets of technological progress, China’s economic transition is proving painful at the grassroots level — highlighting a widening gap between macro resilience and everyday hardship.
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