Perspectives on China’s Economic Future
1. Current Economic Challenges
1.1 Production Capacity
- Current production capacity shows overcapacity in manufacturing but insufficient capacity in high-tech industries. In the long run, low-end manufacturing will inevitably be replaced by machines or relocated overseas.
- Persistent “involution” and increased production capacity have compressed manufacturing profits, leading to reduced labor costs and workforce downsizing (cost reduction and efficiency improvement).
- Recent bankruptcies of “Jiyue Auto” and near-bankruptcy of “Nezha Auto” indicate saturation in China’s new energy vehicle market, with further contraction expected in domestic consumption, contrary to claims of no overcapacity.
1.2 Economic Cycle
- Currently in an economic recession cycle
- Simultaneously entering a deflationary cycle
1.3 Consumption & Per Capita Income
Overview of China’s Total Retail Sales of Consumer Goods 2015-2024
| Year |
Total Retail Sales (100 million yuan) |
Annual Growth Rate |
Data Source |
| 2015 |
300,931 |
+10.7% |
National Bureau of Statistics |
| 2016 |
332,316 |
+10.4% |
National Bureau of Statistics |
| 2017 |
366,262 |
+10.2% |
National Bureau of Statistics |
| 2018 |
380,987 |
+9.0% |
National Bureau of Statistics |
| 2019 |
411,649 |
+8.0% |
National Bureau of Statistics |
| 2020 |
391,981 |
-4.6% |
National Bureau of Statistics |
| 2021 |
440,823 |
+12.5% |
National Bureau of Statistics |
| 2022 |
439,733 |
-0.2% |
National Development and Reform Commission |
| 2023 |
470,000 |
+7.2% |
National Bureau of Statistics |
| 2024 |
487,895 |
+3.5% |
National Bureau of Statistics |
Money Supply (as of December each year)
| Year |
M0 (100 million yuan) |
YoY Growth |
M1 (100 million yuan) |
YoY Growth |
M2 (100 million yuan) |
YoY Growth |
Data Source |
| 2015 |
6,320 |
— |
40,100 |
— |
139,000 |
— |
TradingEconomics |
| 2016 |
6,830 |
+8.06% |
48,700 |
+21.62% |
155,000 |
+11.51% |
Same as above |
| 2017 |
7,060 |
+3.37% |
54,400 |
+11.70% |
168,000 |
+8.39% |
Same as above |
| 2018 |
7,320 |
+3.69% |
55,200 |
+1.47% |
183,000 |
+8.93% |
Same as above |
| 2019 |
7,720 |
+5.46% |
57,600 |
+4.35% |
199,000 |
+8.74% |
Same as above |
| 2020 |
8,430 |
+9.17% |
62,600 |
+8.68% |
219,000 |
+10.05% |
Same as above |
| 2021 |
9,080 |
+7.70% |
64,700 |
+3.36% |
238,000 |
+8.68% |
Same as above |
| 2022 |
10,500 |
+15.64% |
67,200 |
+3.87% |
266,000 |
+11.76% |
Same as above |
| 2023 |
11,300 |
+7.62% |
68,100 |
+1.34% |
292,000 |
+9.77% |
Same as above |
| 2024 |
12,800 |
+13.27% |
67,100 |
-1.47% |
314,000 |
+7.53% |
Same as above |
| Jan 2025 |
14,200 |
+10.94% |
112,000 |
+66.96% |
318,000 |
+1.27% |
Same as above |
Per Capita Income
| Year |
Disposable Income (yuan) |
Median |
Data Source |
| 2015 |
21,966 |
19,281 |
National Bureau of Statistics |
| 2016 |
23,821 |
20,883 |
National Bureau of Statistics |
| 2017 |
25,974 |
22,408 |
National Bureau of Statistics |
| 2018 |
28,228 |
24,336 |
National Bureau of Statistics |
| 2019 |
30,733 |
26,523 |
National Bureau of Statistics |
| 2020 |
32,189 |
27,540 |
National Bureau of Statistics |
| 2021 |
35,128 |
29,975 |
National Bureau of Statistics |
| 2022 |
36,883 |
31,370 |
National Bureau of Statistics |
| 2023 |
39,218 |
33,036 |
National Bureau of Statistics |
| 2024 |
41,314 |
34,707 |
National Bureau of Statistics |
- Retail consumption growth has slowed significantly in recent years, particularly last year
- Consumer willingness has declined, with preference for cheaper products over quality
1.4 Population
Demographic Structure
| Year |
Total Population (100 million) |
Age Structure (%) |
|
|
Gender Ratio (Male:Female) |
Urbanization Rate (%) |
Data Source |
| 2015 |
13.833 |
0–14:16.5 |
15–64:73.0 |
65+:10.5 |
104.88:100 |
57.3 |
National Bureau of Statistics |
| 2016 |
13.923 |
0–14:16.7 |
15–64:72.5 |
65+:10.8 |
104.86:100 |
58.8 |
Same as above |
| 2017 |
14.001 |
0–14:16.8 |
15–64:71.8 |
65+:11.4 |
104.79:100 |
60.2 |
Same as above |
| 2018 |
14.054 |
0–14:16.9 |
15–64:71.2 |
65+:11.9 |
104.63:100 |
61.5 |
Same as above |
| 2019 |
14.100 |
0–14:16.8 |
15–64:70.6 |
65+:12.6 |
104.46:100 |
62.7 |
Same as above |
| 2020 |
14.121 |
0–14:17.9 |
15–64:70.1 |
65+:12.0 |
105.09:100 |
63.9 |
Same as above |
| 2021 |
14.126 |
0–14:17.5 |
15–64:68.3 |
65+:14.2 |
104.88:100 |
64.7 |
Same as above |
| 2022 |
14.118 |
0–14:16.9 |
15–64:68.2 |
65+:14.9 |
104.71:100 |
65.2 |
Same as above |
| 2023 |
14.096 |
0–14:16.3 |
15–64:68.3 |
65+:15.4 |
104.50:100 |
66.2 |
Same as above |
| 2024 |
14.088 |
0–14:17.1 |
15–64:67.3 |
65+:15.6 |
104.34:100 |
67.0 |
National Bureau of Statistics |
Birth/Death Rates
| Year |
Birth Rate |
Death Rate |
Natural Growth Rate |
Data Source |
| 2015 |
11.99% |
7.09% |
4.90% |
National Bureau of Statistics |
| 2016 |
13.57% |
7.04% |
6.53% |
Same as above |
| 2017 |
12.64% |
7.06% |
5.58% |
Same as above |
| 2018 |
10.86% |
7.08% |
3.78% |
Same as above |
| 2019 |
10.41% |
7.09% |
3.32% |
Same as above |
| 2020 |
8.52% |
7.07% |
1.45% |
Same as above |
| 2021 |
7.52% |
7.18% |
0.34% |
Same as above |
| 2022 |
6.77% |
7.37% |
-0.60% |
Same as above |
| 2023 |
6.39% |
7.87% |
-1.48% |
Same as above |
| 2024 |
6.77% |
7.76% |
-0.99% |
National Bureau of Statistics |
- Aging population has significantly increased while working-age population declines, increasing pension burdens on youth
- Growing demand in healthcare, elderly care, and insurance sectors due to aging population has increased demand deposits
2. Potential Solutions
2.1 Population
Reasons for Declining Birth Rates
- Increased pressure on youth, reduced income and income uncertainty make them reluctant to have children or even marry
- Growing elderly care burden with fewer young people supporting each elderly person
- Intensified social competition and “involution” culture, where technological progress hasn’t boosted productivity but increased work pressure
2.2 Economic Circulation
Reasons for Declining Consumption
- Reduced income amid rising prices
- Young people willing but unable to consume, while elderly can but won’t due to generational habits
- Increased unemployment risk makes youth afraid to spend
- Young people lack time to consume as they work overtime to avoid layoffs
2.3 Economic Cycle
Causes of Economic Cycles
- Unreasonable economic structure causing imbalance
- Unfair social distribution exacerbating conflicts
- Widening wealth gap reducing youth consumption willingness
Solutions
- Increase income, improve social welfare and social security systems
- Reduce meaningless “involution”, increase vacation time
- Create more jobs and employment opportunities
- Economic reform to enhance productivity and efficiency
3. Conclusion
In my view, the fundamental contradiction lies in the economic system. China stands at a crossroads of the middle-income trap, with consumption accounting for only 29.7% of GDP.
During China’s transition to high-end industries, outdated distribution issues remain unresolved. While low-end manufacturing capacity increases, so does involution. State-owned enterprises dominate while private innovation declines, reducing jobs and increasing youth employment pressure, creating a vicious cycle where people don’t consume and domestic circulation stalls.
Raising incomes, boosting consumption, ensuring employment, and reducing youth pressure are now critical for economic restructuring. Relying solely on exports—one of the three growth drivers—is unsustainable. The investment market also deserves attention as it can stimulate domestic consumption, increase employment, and improve economic efficiency.
by deyuki 2025-04-18 Translated by DeepSeek-v3 Personal views only, no infringement intended