Name Roll number

Sara Sabreen 5914

Alida Pearl Mathias 5948

Country : China
 China’s downfall
Context
China is currently facing several factors contributing to an economic slowdown. However, a
key issue in evaluating China’s economy is that when things aren’t going in their favor they
just stop reporting it.
China’s economy has been for a very long time dependent on the real estate sector, which has
faced challenges in recent years, leading to economic uncertainties. The real estate sector
provides a source of financing for infrastructure development projects, which have been
critical to China's growth. Typically, China initiates a significant infrastructure project, which
temporarily resolves the financial void. But they’ve tried that tactic too many times and its
success rate is dropping.
In China, the impact of COVID-19 on its economy has been observed in various aspects.
China is a commodity export-based economy that desperately needs the outside world to sell
its goods to. China’s reliance on manufacturing and exports led to disruptions such as supply
chain interruptions, reduced foreign demand, and global economic uncertainties creating
obstacles for China's export-oriented industries.
China has been facing a youth unemployment crisis, which has become a significant concern
for the country. There are a lot of reasons for this crisis, including the aftermath of the
COVID-19 pandemic and structural issues in the Chinese labor market. Every year, millions
of individuals graduate with university degrees. While there may be an abundance of factory
or outdoor, low-paid labor jobs available for the younger generations to pursue, those with a
university degree typically have different aspirations and are not inclined towards these types
of jobs.
The implementation of China's one-child policy had significant demographic and economic
consequences. While the policy aimed to control population growth, it had unintended effects
on the economy, including contributing to a potential economic recession. One of its biggest
impacts was the increase in old people. With fewer children being born, it resulted in a
shrinking workforce and increased pressure on the pension and healthcare systems.
While some analysts suggest that the Chinese economy may continue to grow at a slower
rate, the era of rapid growth appears to be over. There are several concerns about China being
stuck in the middle-income trap forever because of a declining population level.

Article summary

It discusses the economic challenges faced by individuals in China, highlighting a crisis of

confidence that is impacting consumer spending, hiring, and the overall economy. Melody
Zhang, a graduate who has faced numerous rejections in the media industry, is one example
that illustrates the narrative through personal stories. A significant portion of the population
perceives the economy as contracting despite China's official economic growth of 5.2% in the
previous year, including unemployed graduates, property owners experiencing declines in
property values, and workers earning less.
A professor of economics argues that China is in a recession, emphasizing the need for
government intervention to break a vicious cycle of low confidence. With over one in four
young people aged 16-24 unemployed, youth unemployment is a significant issue.
Due to poor domestic demand, businesses have cut costs in response to the economic
downturn, which has also affected salary expectations. There has been a historical shift in
mood as China's economic success, driven by massive investments in manufacturing and
infrastructure, has given way to concerns about debt levels and a changing job market.
Many urban households are heavily invested in property, making the property market a
critical issue. As apartment values decline, property owners experience a loss of wealth,
affecting their spending habits. China's property sector, which used to play a major role in
fueling economic activity, is now considered a hindrance to China's efforts to escape the
middle-income trap.
In addition, the article discusses how external factors like diplomatic tensions with the West
over matters such as Taiwan, Ukraine, and the South China Sea are impacting China's
economic environment. As a result of these tensions, China has experienced its first deficit in
foreign investment.
The article also highlights the impact of U.S. tech restrictions on China, specifically the
challenges faced by businesses in crucial areas such as cutting-edge semiconductors.
In general, the article depicts a difficult economic climate in China, characterized by a crisis
of confidence, elevated levels of youth unemployment, a slump in the property market, and
external geopolitical factors that are exacerbating economic uncertainties.

Critical evaluation

China's recession can largely be blamed on the country's one-party rule system the Chinese
Communist Party under the leadership of Xi Jinping. Since the government doesn’t allow free
trade this has a treacherous impact on employment especially in the fields of finance,
technology, and education. As this can lead to many companies not wanting to open their
business ventures in the country directly leading to unemployment. Another major issue is
that government spending is only confined to the manufacturing sector and not sectors like
service. Many people from the age group of 16 to 24 are unemployed, as most of them are
trained for jobs in the service sector and not the manufacturing sector. The government is
using the levers it is most familiar with to boost the economy and generate jobs: incentives
for home purchases and infrastructure spending. Regrettably, the property and construction
sectors, which are increasingly controlled by the state, are not only known for their lack of
productivity but also have little relevance to the aspirations of young and educated
individuals. The younger generation in China predominantly seeks opportunities in the
service sector, which employs a significant portion of the country's workforce. Consequently,
graduates in fields like literature and computer science show no interest in pursuing careers in
trades like carpentry and bricklaying, even if there are new opportunities arising from
government stimulus efforts. Another thing rapidly falling in the economy is the price of
property due to the lack of demand for it. Even while the government tried to support the
industry, which was once a major contributor to the second-largest economy in the world,
China's struggling real estate market finished last year with the greatest drops in new home
prices in nearly nine years. Furthermore, Beijing and Shanghai eased their limits on home
purchases, reducing the required minimum down payment for both first and second
residences. Unfortunately, these actions haven't improved sentiment toward home ownership.
Numerous Chinese developers have gone into restructuring procedures after defaulting on
their offshore debt. The nation's biggest private real estate developer, Country Garden, issued
a warning this week indicating that it anticipates the real estate market to stay poor. Another
major contributor to this issue is China's one-child policy introduced in 1979 to control
population growth is also one of the crucial reasons for this as the country is battling its aging
population and unemployed youth simultaneously, this also means China has to increase its
spending on the old with facilities such as pension and public welfare homes while also
having to substantially increase efforts in providing employment to the youth. The proportion
of China's working-age population to the nation's total population is declining. As lifespans
rise and fewer individuals have children, the nation is aging quickly. Beijing has been
working over the past ten years to ease limitations on households having only one kid, yet
despite this, the number of births has decreased. Even if there are fewer people in China
overall, a bigger portion of the population needs to be supported by fewer people due to a
declining working-age ratio. This could possibly hinder economic growth, create challenging
social and stop it from being a global superpower.

Conclusion

China's officials should take note: increasing the number of graduates while cutting back on
services and providing building subsidies is poor social policy and poor economics. It would
exacerbate China's already unbalanced economy and inflame the dissatisfaction of a
generation that China will need to sustain its future economic growth. So the government
must focus more on allowing free trade which will directly help in boosting employment and
they must further increase their expenditure in the service sector helping the economy grow
further.

Works cited

https://www.pbs.org/newshour/economy/is-chinas-one-child-policy-to-blame-for-its-
economic-slowdown

https://www.reuters.com/world/china/chinas-dec-new-home-prices-fall-fastest-pace-since-
feb-2015-2024-01-17/

https://en.m.wikipedia.org/wiki/Aging_of_China#:~:text=China's%20population%20is%20ag
ing%20faster,its%20development%20than%20other%20countries

https://www.cfr.org/blog/root-chinas-growing-youth-unemployment-crisis
https://www.nytimes.com/2023/08/21/business/china-economy-real-estate-crisis.html
https://www.cnn.com/2022/09/19/economy/china-youth-jobs-crisis-xi-jinping-intl-hnk-
mic/index.html
https://www.weforum.org/agenda/2013/11/what-does-chinas-easing-of-the-one-child-rule-
mean-for-the-economy/