Authored by James Gorrie via The Epoch Times,
China’s economic decline has been extensively documented, with the propaganda unable to hide the extent of the damage. The Chinese people are increasingly aware of the situation, as evidenced by the austere 75th anniversary celebration of the Chinese Communist Party (CCP). The negative economic indicators have been accumulating for years.
China was already facing challenges in 2018 and 2019 due to the steep tariffs imposed by the Trump administration on Chinese goods. The COVID-19 pandemic and CCP’s stringent “zero-COVID” three-year lockdown exacerbated China’s economic downturn significantly.
China Is Facing Unprecedented Challenges
As we approach the final quarter of 2024, the CCP is grappling with unprecedented domestic economic conditions. This has led to a surge in civil unrest, which is now 18 percent higher than the previous year. The economic slowdown has various dimensions, some of which are highlighted below.
The real estate sector, constituting about 30 percent of GDP, continues to deteriorate with no signs of recovery in sight. Home prices and sales are on a downward trajectory. Additionally, Chinese consumers are spending less, accounting for only 38 percent of GDP compared to 60-70 percent in developed countries.
Youth Unemployment and Disillusionment
Unemployment among China’s youth (ages 16-24) was at least 21 percent, and potentially higher, before the CCP ceased publishing unemployment figures in June 2023. The new method of measuring youth unemployment released in December of that year indicated a rate of 14.9 percent, still significantly higher than the national average of 5.1 percent.
High youth unemployment rates hinder future growth prospects and contribute to the rise of the “lie flat” trend among China’s younger generation, who lack hope and ambition for a lifestyle similar to that of their parents.
Sloth and disillusionment are not conducive to a robust economy. The CCP remains wary of disaffected youth movements, given the lingering memory of Tiananmen Square in 1989.
Embedded Political and Industrial Policies
China’s economic structure is underpinned by low domestic consumption and high savings rates, enabling the Party to exert control over industrial policy and private capital allocation. However, this focus on industrial output over innovation has resulted in overproduction and unprofitable factories.
Constant oversupply of products, ranging from electric vehicle batteries to electronics, has led to trade frictions and worsened conditions both domestically and internationally.
China’s distorted industrial policies, coupled with a loyalty-based political system, pose challenges to meaningful change without disrupting the CCP’s grip on power.
A Continued Downward Spiral
In recent years, China has experienced deflation, declining domestic consumption, and waning confidence in the CCP. Despite efforts to support critical sectors like artificial intelligence and military advancements, billions of dollars continue to flow out of China.
Wolf Warrior Diplomacy Prevails
China’s aggressive “wolf warrior diplomacy” persists as Beijing seeks to control the narrative and assert dominance on the global stage. The economic downturn and rising unrest at home have fueled this approach, with Beijing blaming external factors for internal economic failures.
Recent provocations and incursions into territorial waters and airspace, coupled with aggressive maneuvers in the South China Sea, underscore China’s assertive foreign policy stance.
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