Earlier this year, David Yang was brimming with confidence about the prospects for his perfume factory in eastern China.<\/p>\n
After nearly three years of paralyzing Covid lockdowns, China had lifted its restrictions in late 2022. The economy seemed destined to roar back to life. Mr. Yang and his two business partners invested more than $60,000 in March to expand production capacity at the factory, expecting a wave of growth.<\/p>\n
But the new business never materialized. In fact, it\u2019s worse. People are not spending, he said, and orders are one-third what they were five years ago.<\/p>\n
\u201cIt is disheartening,\u201d Mr. Yang said. \u201cThe economy is really going downhill right now.\u201d<\/p>\n
For much of the past four decades, China\u2019s economy seemed like an unstoppable force, the engine behind the country\u2019s rise to a global superpower. But the economy is now plagued by a series of crises. A real estate crisis borne from years of overbuilding and excessive borrowing is running alongside a larger debt crisis, while young people are struggling with record joblessness. And amid the drip feed of bad economic news, a new crisis is emerging: a crisis of confidence.<\/p>\n
A growing lack of faith in the future of the Chinese economy is verging on despair. Consumers are holding back on spending. Businesses are reluctant to invest and create jobs. And would-be entrepreneurs are not starting new businesses.<\/p>\n
\u201cLow confidence is a major issue in the Chinese economy now,\u201d said Larry Hu, chief China economist for Macquarie Group, an Australian financial services firm.<\/p>\n
Mr. Hu said the erosion of confidence was fueling a downward spiral that feeds on itself. Chinese consumers aren\u2019t spending because they are worried about job prospects, while companies are cutting costs and holding back on hiring because consumers aren\u2019t spending.<\/p>\n
In the past few weeks, investors have pulled more than $10 billion out of China\u2019s stock markets. On Thursday, China\u2019s top securities regulator summoned executives at the country\u2019s national pension funds, top banks and insurers to pressure them to invest more in Chinese stocks, according to Caixin, an economics magazine. Last week, stocks in Hong Kong fell into a bear market, down more than 20 percent from their high in January.<\/p>\n
From its resilience to past challenges, China forged a deep belief in its economy and its state-controlled model. It rebounded quickly in 2009 from the global financial meltdown, and in spectacular fashion. It weathered a Trump administration trade war and proved its indispensability. When the pandemic dragged down the rest of the world, China\u2019s economy bounced back with vigor. The Global Times, a mouthpiece for the Chinese Communist Party, declared in 2022 that China was the \u201cunstoppable miracle.\u201d<\/p>\n
One factor contributing to the current confidence deficit is the prospect that China\u2019s policymakers have fewer good options to fight the downturn than in the past.<\/p>\n
In 2018, with the economy in a trade war with the United States and its stock market nose-diving, Xi Jinping, China\u2019s leader, gave a rousing speech.<\/p>\n
Mr. Xi was addressing an international trade fair in Shanghai and sought to quell the uncertainty: No one should ever waver in their confidence about the Chinese economy, despite some ups and downs, he said.<\/p>\n
\u201cThe Chinese economy is not a pond, but an ocean,\u201d Mr. Xi said. \u201cThe ocean may have its calm days, but big winds and storms are only to be expected. Without them, the ocean wouldn\u2019t be what it is. Big winds and storms may upset a pond, but never an ocean. When you talk about the future of the Chinese economy, you have every reason to be confident.\u201d<\/p>\n
But in recent months, Mr. Xi has said little about the economy.<\/p>\n
Unlike past crises that were international in nature, China is confronted by a convergence of long-simmering domestic problems \u2014 some a result of policy changes carried out by Mr. Xi\u2019s government.<\/p>\n
After the 2008 financial crisis, China unleashed a huge stimulus package to get the economy moving again. In 2015, when its real estate market was teetering, Beijing handed out cash to consumers to replace rundown shacks with new apartments as part of an urban redevelopment plan that gave rise to another building boom in smaller Chinese cities.<\/p>\n
Now, policymakers are confronting a far different landscape, forcing them to rethink the usual playbook. Local governments and businesses are saddled with more debt and less leeway to borrow heavily and spend liberally. And after decades of infrastructure investments, there isn\u2019t as much need for another airport or bridge \u2014 the types of big projects that would spur the economy.<\/p>\n
China\u2019s policymakers are also handcuffed because they introduced many of the measures that precipitated the economic problems. The \u201czero Covid\u201d lockdowns brought the economy to a standstill. The real estate market is reeling from the government\u2019s measures from three years ago to curb heavy borrowing by developers, while crackdowns on the fast-growing technology industry prompted many tech firms to scale back their ambitions and the size of their work forces.<\/p>\n
When China\u2019s top leaders gathered in July to discuss the rapidly deteriorating economy, they did not deliver a bazooka-style spending program as some had anticipated. Coming out of the meeting, the Political Bureau of the Chinese Communist Party presented a laundry list of pronouncements \u2014 many rehashed from previous statements \u2014 without any new announcements. It focused, however, on the need to \u201cboost confidence,\u201d without detailing the measures that showed policymakers were ready to do that.<\/p>\n
\u201cWhether you have confidence in the Chinese economy is actually whether you have confidence in the Chinese government,\u201d said Kim Yuan, who lost his job in the home decoration industry last year. He has struggled to find another job, but he said the economy was unlikely to worsen significantly as long as the government maintained control.<\/p>\n
Source: China National Bureau of Statistics via CEIC Data<\/p>\n
By The New York Times<\/p>\n
Confronted with dwindling confidence, the government has fallen back on a familiar pattern and stopped announcing troubling economic data.<\/p>\n
This month, China\u2019s National Bureau of Statistics said it would stop releasing youth unemployment figures, a closely watched indicator of the country\u2019s economic troubles. After six straight months of rising joblessness among the country\u2019s 16-to-24-year-olds, the agency said the collection of those figures needed \u201cto be further improved and optimized.\u201d<\/p>\n
The bureau this year also stopped releasing surveys of consumer confidence, among the best barometers of households\u2019 willingness to spend. Confidence rebounded modestly at the start of the year, but started to plummet in the spring. The government\u2019s statistics office last announced the survey results for April, discontinuing a series it began 33 years ago.<\/p>\n
Instead of giving people less to worry about, the sudden removal of closely followed data has left some on Chinese social media wondering what they might be missing.<\/p>\n
For Laurence Pan, 27, he noticed that something was beginning to go awry in 2018 when customers at the international advertising agency in Beijing where he worked at the time started to scale back budgets. Over the next few years, he hopped from one agency to another, but the caution from clients around spending was the same.<\/p>\n
He resigned from his last employer three months ago. Mr. Pan said he secured new jobs quickly in the past, but he has struggled to find a position this time. He has applied for nearly 30 jobs since last month and he has not received an offer. He said he was considering part-time work at a convenience store or a fast-food restaurant to make ends meet. With so many uncertainties, he has cut back on his spending.<\/p>\n
\u201cEveryone is having a hard time now and they have no money to spend,\u201d he said. \u201cThis might be the most difficult time I\u2019ve ever been through.\u201d<\/p>\n
Daisuke Wakabayashi<\/span> is an Asia business correspondent for The Times, based in Seoul. More about Daisuke Wakabayashi<\/span><\/p>\n