{"id":49155,"date":"2026-05-21T03:14:10","date_gmt":"2026-05-20T19:14:10","guid":{"rendered":"https:\/\/chinaworker.info\/?p=49155"},"modified":"2026-05-21T03:14:12","modified_gmt":"2026-05-20T19:14:12","slug":"there-is-nothing-temporary-about-chinas-economic-crisis","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2026\/05\/21\/49155\/","title":{"rendered":"There is nothing temporary about China&#8217;s economic crisis"},"content":{"rendered":"<p dir=\"ltr\"><strong>Record youth unemployment, worsening property crash and consumption slump<\/strong><\/p>\n<p dir=\"ltr\">Li Yong, <a href=\"http:\/\/chinaworker.info\/\" target=\"_blank\" rel=\"noopener\" data-saferedirecturl=\"https:\/\/www.google.com\/url?q=http:\/\/chinaworker.info&amp;source=gmail&amp;ust=1779389712320000&amp;usg=AOvVaw2d9S_yT-AUJdAhMJCU8ku5\">chinaworker.info<\/a><\/p>\n<p dir=\"ltr\">Over the past few years, the Chinese Communist Party dictatorship and the bourgeois media have repeatedly claimed that \u2018a recovery is on the way\u2019, but the reality is quite the opposite: the economic downturn in China is a comprehensive economic and social crisis. Very high youth unemployment and widespread pessimism are the most striking manifestations of this crisis. At the heart of the problem lies the fact that the debt-fuelled growth model of Chinese capitalism over the past few decades has reached its limits.<\/p>\n<p dir=\"ltr\">The property sector crash is now in its 6th year. China\u2019s property market represents the largest property bubble in global history. Between 2006 and 2020, half of the world\u2019s new residential properties were built in China.<\/p>\n<p dir=\"ltr\">Property is not merely a single industry, but the central pillar of the entire Chinese economy: it drives steel, cement, construction, finance, local government finances and even household consumption. For a long time, the property sector and related industries accounted for approximately one-third of China\u2019s GDP. Now, according to US based Rhodium Group, this share has fallen to 11.4 percent.<\/p>\n<p dir=\"ltr\">Apart from turbo-charged exports, which are inviting massive protectionism from foreign governments, there is no sector of the economy that comes close to filling the gigantic hole left by the property sector&#8217;s collapse. This is not merely a cyclical downturn but a historic structural crisis.<\/p>\n<p dir=\"ltr\">The scale of this collapse even exceeds that of the US housing crisis of 2006\u20132008 and the bursting of Japan\u2019s economic bubble. Between 2020 and 2024, losses in China\u2019s property market have already exceeded 120 trillion yuan (18 trillion US dollars), and may now have surpassed 170 trillion yuan \u2013 a figure even higher than China\u2019s annual GDP. This is precisely the root cause of the pressure widely felt in Chinese society today.<\/p>\n<p dir=\"ltr\"><strong>Japanese-style stagnation<\/strong><\/p>\n<p dir=\"ltr\">Over the past two decades, the wealth of China\u2019s urban middle class has been built largely on the illusion of ever-rising property prices, which the CCP also heavily promoted. Capitalist developers like Evergrande recklessly borrowed incredible sums to build millions upon millions of now vacant houses and entire ghost cities.<\/p>\n<p dir=\"ltr\">Around 40% of urban residents own more than one apartment as investments. Yet today, these properties are no longer \u2018wealth\u2019 but have become a burden they cannot offload. With the value of household assets shrinking on a massive scale, the ability to spend has plummeted.<\/p>\n<p dir=\"ltr\">The result is a vicious circle: people cut back on spending, demand falls; businesses scale back production, cut wages and lay off staff; and as incomes decline, consumption shrinks further. More than ten years ago, we Marxists repeatedly emphasised the concept of \u2018Japanification\u2019 in our perspectives to describe the Chinese economy. Lately, more and more capitalist \u2018experts\u2019 are reluctantly coming to the same conclusion.<\/p>\n<p dir=\"ltr\">\u2018Japanification\u2019 refers not merely to a sharp slowdown in growth, but to a state of prolonged economic stagnation due to huge and growing debt levels that weigh on all sectors of the economy. China&#8217;s total debt has increased five-fold since 2010 from around $10 trillion to $50 trillion USD. According to the Institute of International Finance the debt-to-GDP ratio is now over 330%.<\/p>\n<p dir=\"ltr\">Before the bursting of its bubble in the 1990s, Japan was also regarded as an invincible economic powerhouse. At that time, Japan accounted for approximately 14 percent of global GDP and was the world\u2019s second-largest economy. However, following the bursting of the bubble, Japan fell into a period of stagnation lasting more than three decades. Today, Japan\u2019s share of global GDP has fallen to around 4 percent, and it has even been overtaken by Germany.<\/p>\n<p dir=\"ltr\">Over the past few decades, China\u2019s economy has relied on debt-driven growth. Local governments, property developers, banks and households have continuously increased their debt to prop up investment and property prices. This model appeared to be effective and was cheered by the capitalists worldwide especially after the 2008 meltdown of the US financial system and \u2018Great Recession\u2019 which followed. But as we predicted at the time in reality it merely served to inflate a financial bubble as happened in Japan. Now, the bubble has burst across the board.<\/p>\n<p dir=\"ltr\"><strong>Financial crisis<\/strong><\/p>\n<p dir=\"ltr\">The CCP dictatorship\u2019s high level of control over the banking system \u2013 which is an important difference compared to Japan and Western economies \u2013 has apparently prevented the property collapse from causing a full-blown financial crisis. It does this by shuffling debts from one hand to the other and back again in a gigantic financial juggling trick.<\/p>\n<p dir=\"ltr\">\u2018Special bonds\u2019 are issued in growing amounts to enable local governments to pay off some of their monster debts: replacing old debt with new debt. But at some point this new \u2018Ponzi scheme\u2019 can also collapse, triggering a banking crisis despite the CCP\u2019s \u2018control\u2019.<\/p>\n<p dir=\"ltr\">That local governments, which are hugely hit by the property crash, are running out of money is shown by wage cuts and wage arrears for government employees in virtually all parts of the country. There are new features of this crisis in 2026. Car sales have dropped dramatically, by 20.6 percent in the first four months of this year \u2013 the world&#8217;s biggest auto sector is increasingly dependent on exports to survive. Home appliance sales have shrunk by almost 6 percent in the same time frame. A major reason in both cases is that purchase subsidies for cars and home appliances, which are partly financed by local governments, have been withdrawn.<\/p>\n<p dir=\"ltr\">At the same time, the central government\u2019s own fiscal pressures are mounting. Last year, the Chinese central government\u2019s total revenue saw its first decline since 2020, during the pandemic. In 2025, interest payments on debt within China\u2019s local general public budgets grew by 6.7% year-on-year, exceeding the official (and exaggerated) GDP growth rate. And this is merely \u2018explicit debt\u2019, not yet accounting for the even more massive scale of implicit or hidden debt.<\/p>\n<p dir=\"ltr\">\nMeanwhile, the global capitalist crisis is deepening in tandem. Both Western governments \u00a0and the Global South are increasingly inclined to impose restrictions on Chinese goods. The scope for China to utilise exports to absorb its excess production capacity is steadily narrowing. Consequently, the Chinese economy faces not merely short-term difficulties, but a long-term, deep-seated historical crisis.<\/p>\n<p dir=\"ltr\"><strong>Youth hit hardest<\/strong><\/p>\n<p dir=\"ltr\">Young people, however, are the generation that is feeling the effects of this crisis most severely. The officially published youth unemployment rate stands at 16.9 percent, but the actual figure is likely far higher, possibly approaching 40 percent. This year, a further 12.6 million university graduates will enter the job market in China, setting yet another record high, and the unemployment crisis will only grow bigger. This unemployment crisis is not because young people are \u2018not trying hard enough\u2019, nor is it due to the so-called \u2018lying-flat culture\u2019 as CCP propaganda claims.<\/p>\n<p dir=\"ltr\">On the contrary, the vast majority of young Chinese simply do not have the means to truly \u2018lie flat\u2019. To pay their rent and maintain a basic standard of living, they are still forced to work long hours. The so-called \u2018lying flat\u2019 is more of a state of mind, an attitude \u2013 a loss of confidence in the future and a sense of despair regarding the system. Marxists understand that ideas reflect and are shaped by material conditions. The historic unemployment crisis is a material fact, as are low pay and tortuous long working hours in China\u2019s authoritarian capitalist system.<\/p>\n<p dir=\"ltr\">For today\u2019s Chinese youth, \u2018striving\u2019 often means debt, involution and a race with no finish line; whereas \u2018lying flat\u2019 at least signifies a refusal to become part of the debt machine. It is precisely this sentiment that the Chinese Communist Party fears most.<\/p>\n<p dir=\"ltr\">Consequently, the authorities persistently portray \u2018lying flat\u2019 as an ideological issue, even going so far as to absurdly claim that \u2018foreign forces\u2019 are creating it from behind the scenes. But such rhetoric not only fails to solve the problem; it further stokes the anger and derision of young people. For what truly causes \u2018lying flat\u2019 is not propaganda, but the capitalist system itself.<\/p>\n<p dir=\"ltr\">\nThe bursting of the property bubble, the local government debt crisis, shrinking consumption, trade wars and youth unemployment are not isolated issues, but different manifestations of the same capitalist crisis. The crisis is deepening while social discontent is rapidly rising. The old model of maintaining \u201cstability\u201d through high-speed growth is no longer possible.<\/p>\n<p dir=\"ltr\">For the capitalist dictatorship of the Chinese Communist Party, the real danger lies not merely in an economy that has effectively stopped growing, but the social volcano that will inevitably erupt as more and more people realise this is not a temporary difficulty, but rather Chinese capitalism\u2019s new reality.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Record youth unemployment, worsening property crash and consumption slump Li Yong, chinaworker.info Over the past few years, the Chinese Communist Party dictatorship and the bourgeois media have repeatedly claimed that \u2018a recovery is on the way\u2019, but the reality is quite the opposite: the economic downturn in China is a comprehensive economic and social crisis. [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":49160,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[132,124],"tags":[207,174,3874,10221],"class_list":{"0":"post-49155","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-china","8":"category-news","9":"tag-ccp","10":"tag-china-2","11":"tag-economic-crisis","12":"tag-unemployment"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>There is nothing temporary about China&#039;s economic crisis - China Worker<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chinaworker.info\/en\/2026\/05\/21\/49155\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"There is nothing temporary about China&#039;s economic crisis - China Worker\" \/>\n<meta property=\"og:description\" content=\"Record youth unemployment, worsening property crash and consumption slump Li Yong, chinaworker.info Over the past few years, the Chinese Communist Party dictatorship and the bourgeois media have repeatedly claimed that \u2018a recovery is on the way\u2019, but the reality is quite the opposite: the economic downturn in China is a comprehensive economic and social crisis. 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