The other China — gloomy China — tells a different story: sluggish consumer spending, rising unemployment, a chronic housing crisis and a business community bracing for the impact of the trade war.
this post was submitted on 13 May 2025
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Housing crisis? Isn't China's homeless percentage nearly nonexistent while the US is as high as 40 homeless people per 10,000 total population? What the fuck are they even talking about?
crisis is when line of asset prices don't go up, which in normal society - it shouldn't, everyone has home, why in fuck would you buy more.
They might be calling the housing bubble in China a "housing crisis?" It isn't a crisis of people being homeless but investing in housing and losing trillions of yuan collectively
I can't give an informed answer, but when I visited China for work I did see homelessness (people living in caves and getting water from a river as explained to me by our hosts). Not as prevalent as I've seen on the US West Coast
at what cost?
But as we marvel at China’s so-called miracles, it is necessary to ask: At what cost? Not just financial, but human.
More efficient for WHO, LI??
I don’t think the article is bad, though there were certainly some biases.
The author did not mention anything about the decentralized governance in China, and how the central government had failed to rein in on the local/municipal governments in their incessant chase for GDP growth numbers that led to unrestrained and reckless investment in the real estate market.
The excessive housing/property building over the past decade in China will go down as one of the biggest misallocation of capital in history, and will certainly be looked back in horror (and many people already did, just ask the people who took out savings and loans to buy their houses only to have the value plummeted by 40-50%, and they still have to keep paying the mortgage for the next 30 years on a house that is worth half of that! I wonder why people are reluctant to spend money to consume in this economy.)
To be clear, unleashing land capital is not a bad thing at all, if properly planned. To build new cities/housing projects, you drive the construction and raw material processing sector (steel, concrete etc.). Then when people started to move in, they have to renovate their new homes, buy home appliances etc. which will drive another cycle of boom in the manufacturing sector. Finally, as residential areas become occupied, new businesses like restaurants and shops will move in, driving yet another cycle of boom. New public transit can also bring connectivity between neighborhoods and Rinse and repeat and you can play out these cycles over many decades.
China really squandered this opportunity by the reckless infrastructure building because every city feared that they would be the one to miss out on the property speculative boom, so what you end up is excessive housing capacity (several more times the current population of China!), prices went down just as fast as they went up (doesn’t help that the property developers are all mired in huge corruption and mismanagement scandals like Evergrande and Vanke). And with many neighborhoods having poor occupancy rate (there are entirely new “cities” with 3-4% occupancy rate), it is almost impossible to do proper urban planning and drive a regional economic boom as initially promised.
The problem with China is that - unlike what many people think - the central leadership actually had a very limited role when it comes to the implementation part of the national economic planning. This is simply the inevitable outcome of the decentralization process that had occurred in the post-Mao reform era.
I think China’s leadership will eventually have to concede that they will have to re-centralize the authority and take the power away from the local governments and return to some semblance of a central planning, which has become kind of a dirty word among the Western educated economists in China today.
The author also neglected the crux of the problem: wealth inequality. When exports were high, investments were booming, you can almost paper over the latent complications that came with massive build up of wealth inequality. After all, millions and millions of people were lifted out of poverty, what’s the problem there?
But as exports can no longer be heavily reliant upon, the infrastructure investment era coming to an end, consumption became the only way out for the economy only to find out that too much wealth had been concentrated in the hands of too few people. This is where we are right now.
I wrote an entire “wall of text style” comment (some people complained, sorry) on the Chinese economy just yesterday, so if you’re not afraid of reading endless paragraphs of text, feel free to read up what I have written there and ask me any questions.
My biggest issues with these articles are:
- Flattening of Chinese systems into mystical bad guy shit (like you said the lulzy idea that Xi Jinping personally selects investment vs a system of municipal sovereign wealth funds chasing the bag).
- Inherent comparison without actively understanding the complexity
I think China's misstep with and flirtation with land speculation certainly warrants a retrospective, but it's inherent comparison with the United States is flawed at best. While China's strategy did prefer their middle and richest over their poor, much like the American counterpart, and much like the American counterpart it individuals ended up holding the bag, the outcomes are slightly in favor for China. CPC has the ability, will and capacity to repurpose overbuilt areas, while in America they would legalistically and realistically end up rotting.
And I think one of the big problems that we're gonna see in China is going to be getting a handle on the practical decentralization. The Evergrande fallout was similar to the US financial crisis, however it's causes are similar to US de-industrialization and tax policy where localities compete with each other for economic development (e.g. every mayor bending over backwards to tongue polish Bezos boots for the mere hope of Amazon H2 in their area). This leads to suboptimal development and a race to the bottom. China however can still protect itself from this, the US needs such a deep and massive reform to the point where the system will be alienated from itself to even call it a "reform" rather than a revolution.
I think the problem with these kinds of comparisons is they always seek to pretend China is worse when China is just running a mod on top of what other capitalist countries have been doing for a while. Sovereign wealth funds are a tweak on pension funds that have disappeared or privatized in the US. China just has much more active investment strategies and the CPC's regulatory state protects them from the kind of open market dumping we have with IPOs for companies like Tesla, Uber, WeWork, etc whose product can never actually be profitable without a particular set of economic constraints. While incidents like Evergrande can still happen, there's no "mining" of retirement funds by venture capitalists riding high on pure speculation and mythology.
However, the article gets very much into meme territory redressing the primary issues. For example, the dreaded 17% youth unemployment numbers. Seems scary but in proper comparison America is not doing much better, in fact in comparison we don't know how bad we're doing.
For example the U3 rate which is what US considers "real unemployment" (because all the higher U rates have this aspect of individual immoralism to them) is currently 4.2% among the "youth", U3 is 8.2%.
However these are not the same number, what the 17% number (as far as I understand it) represents a population much closer to 100% - labor participation rate without disability in the US. The numbers are not the same because China's actual measure of labor participation has issues considering rural labor (shadow economy issues). The actual 17% is based on surveyed unemployment. In the US these numbers are not counted and easily accessible. For example the "youth" labor participation rate is 72.1% including disability. Which paints a more grim picture of American youth unemployment than Chinese.
China has certainly failed into some capitalist style development traps, but it's understanding of where it is is much more honest and much more pro-social compared to the US. The reality is that in US we have the ability to collect and analyze these statistics in a pro-social way, we choose not to because it would reveal some pretty ugly truths about the country. U3 is used because our economy is set up to have losers and we want to forget about them. China does not fool itself in this way.
The youth unemployment is actually serious issue right now, and I don’t see any reason to downplay it. Again it is tied to the entire economic downturn climate.
Here’s the data for graduates of class 2023 and 2024 who received a job offer (proportion of graduates with job offer):
(From left to right: Masters/PhD, Bachelors, Diploma)
As you can see, only 44.4% of Masters/PhD graduates last year had a job offer, down from 56.7% from 2023. Nearly half of the people who graduated over the past 2 years could not find a job, and the problem is only going to intensify when even more people graduate and look to joining the workforce this year.
Anecdotally, I have seen more and more advertisements for military recruitment. I think joining the military could funnel off some of the unemployed youths and this fits in with the global militarization wave. I hope we don’t come to a war soon, though.
Starting January 1st, 2025, the retirement age of male worker has been increased from 60 years to 63 years, while female worker from 50 to 55, and 55 to 58. This is straight from the State Council of the PRC.
You have to ask yourself this: how can China experience so much technological progress and amazing automation and robotics, yet at the same time require the people to work even harder. If your model cannot answer this contradictory problem, that means there is a serious gap in your understanding of the Chinese economy.
As mentioned, the deflationary spiral is already leading to layoffs across many different sectors, which are being exacerbated by the tariffs/trade war, intense competition/price wars e.g. EV/solar panel sector, the property market bursting and most important of all, wealth inequality.
You cannot keep giving subsidies/discounts and hope to stimulate consumption out of that. This is a wealth redistribution problem, and as long as the leadership is not taking this seriously, it will be difficult to overcome the economic downturn.
I agree with you here.
But the focus of your comment and the focus of the article are different. The article is inherently comparative between China and the US, while your comment explicates the situation in China alone. The compares the US, but it is missing the state of play for the US half of the equation.
The US part is complex and there's not a comprehensive rundown (because nobody cares), but we can start with something like this.
The majority of college graduates are underemployed. Meaning they're taking jobs at McDonalds or running Uber Eats rather than using their degrees.
We have several crises simultaneously here:
- a lack of expansion for knowledge based jobs.
- elite over reproduction
- a market demand for labor that is detached from the day to day needs of a job (e.g. demanding degrees for jobs that don't require them, laundry list of demands that feed elite over reproduction and end up with job seekers who are unfulfilled because of lies the system told them)
Starting January 1st, 2025, the retirement age of male worker has been increased from 60 years to 63 years, while female worker from 50 to 55, and 55 to 58. This is straight from the State Council of the PRC.
This is a great example of what I mean. This is happening all across the Western world as well, except those ages are rookie numbers for us. In the US full retirement age went up to 68 this year, and that was planned not a reaction to the current economic state. What we're hearing from the right wing is numbers like 72 some as high as 80. France was 62 now 64. Etc.
I think both systems are facing the same general problem of the bottom falling out of the economy in various ways. However even under the "blue guys" from my perspective the US has not been taking this problem as seriously from a cultural, political or governance standpoint as China. Thus it has no right to comparison. Like I said I agree that there is more that the CPC can do, and I'm not trying to reflexively defend the sainthood AES countries, but it's one of those American things where we just need to hear that other people are doing bad so we can feel good, regardless of the reality of our living situation. It's culturally the way this country is ruled internally as well.
We're simply in different leagues, and comparisons that are for upper-middle class Western audiences cannot be honest about Westerners being in a worse league.
I don’t disagree with you at all but if you actually read the article, the author doesn’t say the American system is superior than the Chinese, rather that China is more complex than what people superficially see it as and Americans should seek to understand it in its entirety rather than seeing only the good side and praise it, or only the bad side and criticize it.
Yes the author is very careful in her wording but that's not how this is perceived by people in the US
Jack Ma is the most oppressed man in the world
Good
Investors are private equity now. You're going to hear a lot more in the next couple of years about private equity I predict. Google Blackstone, leverage, risk, regulation, transparency. They basically do leveraged buyouts with very little actual capital and a fuckton of borrowed money based on expected returns. Which are ghosts.
An entire system built on vapour and any downturn means leverage collapses and everyone I mean everyone gets unemployed. 2008 was a warmup.