China has released a slew of economic data this morning, showing its economy grew last year by a solid 5% percent, meeting the government’s target.
Other annual figures released show that total retail sales of consumer goods were up by 3.5% last year, compared to 2023.
But despite these positive indicators China’s economy is still facing challenges from the real estate crisis fallout, people are concerned about their job prospects and there is a reluctance to spend money domestically.
The misty megacity of Chongqing in southern China (population 32 million people) is a good place to take the temperature of the country’s economy.
Cathy Zhou and her mother Mrs Deng stuffed dumplings while describing their economic worries to Sky News.
Cathy has been unemployed since the end of COVID-19. She said she can’t find a job that pays her enough to live on and that salaries have halved.
“I used to be the headmaster of a training school,” Ms Zhou said. “Some of my friends have been at home for one or two years, looking for jobs, but can’t find any. They stay home, get some hope and look again.”
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She added: “Before my friends would tell me they buy bags, buy clothes, but now they are shopping less and everyone is saving.”
Ms Zhou’s retired mother Mrs Deng worked in a factory for almost 30 years.
“The younger generation have less stable jobs, if they lose it they still need to pay their mortgage, so we have to save money to help them,” she said.
With Chinese New Year around the corner, the government is trying to boost consumer demand.
It’s expanded a list of subsidies to encourage people to trade in old electric products, like rice cookers and televisions, for new ones.
Last year, China announced a massive economic stimulus package to buy local government debt worth $1.4trn (£1.15trn) over five years.
On New Years Eve, China’s President Xi Jinping said: “China’s economy has rebounded and is on an upward trajectory.”
But President Xi also acknowledged there is deep worry too.
“The concerns of the people about jobs and incomes, elderly and childcare, education and medical services are always on my mind,” the president said. “This year, basic pension has been raised, and mortgage rates have dropped.”
The other concern for China has been stubbornly high youth unemployment as almost one in five can’t find a job.
Economic analyst at the Economic Intelligence Unit, Xu Tianchen, said: “I think the government is quite worried because if unemployment continues to grow, it will lead to issues with social instability and that is not something the government would tolerate.”
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In 2023, President Xi told young people they would need to accept the hardship and “eat bitterness”.
But now the government appears to be softening its message and looking for levers to pull to create jobs and boost consumption.
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Over a plate of steaming dumplings, Ms Zhou said: “I don’t think there is any ‘obvious’ results coming out of eating bitterness.”
Her best friend Pipi agreed: “If you want to get to the next level, you have to work harder and put in more effort than other people or you will just fall behind.”
