China’s middle class has suffered a sharp drop in income amid the country’s worsening economic conditions. Most have chosen to hunker down, not invest, not explore business opportunities, and cut back on expenses to protect their assets with minimal losses.
Salary cuts have hit the civil service sector, while banks and state-owned enterprises have resorted to layoffs. Jobs in the private sector has also been affected.
Xu Jie (a pseudonym) resides in Changchun, northeastern China’s Jilin Province, and had been running a hotel supplies company for decades, with annual revenues once reaching nearly one million yuan and a staff of more than a dozen salespeople. She also owns two brick-and-mortar stores displaying products.
However, her company began losing money during the COVID-19 pandemic, and she had to abandon the business. Since then, she has invested in various financial products and the stock market but lost hundreds of thousands of yuan.
“In China, there is nothing that can be done now, no matter what is invested will be lost, instead, it is wise not to invest,” Ms. Xu told The Epoch Times.
She now makes a living by renting out two storehouses, a garage, and four sets of apartments. However, the collapse of the real estate industry has heavily shrunk the value of her assets. One of her properties, a two-bedroom apartment in a fairly affluent location, worth 650,000 yuan ($89,700) before the pandemic, was put up for sale at 450,000 ($62,000).
Despite the substantial concessions, “no buyers have come in with inquiries so far,” she said. Ms. Xu has also had to lower her rent due to the downturn in the rental market. After failing various attempts to make money, Ms. Xu said she had joined the ranks of the “lying flat,” a phrase the Chinese have adopted for those who aren’t investing or exploring business, hoping to minimize losses in the economic turmoil.
“The middle class in China is very anxious. What we are anxious about is that we don’t dare to spend money and can only cut back on expenses. I can’t afford to lose any money, so it’s best to hold on to my current income, and now I feel reassured that I do not have a mortgage or a car loan,” she said.
Ms. Xu has been able to maintain nearly 200,000 yuan ($27,600) a year in income which supports her daughter studying at the University of Macau.
But not all middle class people are as lucky.
Ms. Xu said her daughter’s classmates are now studying in Hong Kong and have started to take part-time jobs to make ends meet after their parents’ incomes have dwindled.
Lu Bin (a pseudonym) from Yiyang City, Hunan Province in central China, told The Epoch Times that several of his wealthy middle class acquaintances said they have given up efforts in their business development. “They said they don’t work, don’t invest, don’t run a store, save up their money, eat and drink in moderation. Because as long as they move to invest, they will lose money. There are too many traps now, and everyone is more hostile.”
Li Yuanhua, an Australian history scholar, told The Epoch Times that the biggest beneficiaries of the Chinese Communist Party’s (CCP) decades-long economic reforms have been the party interest groups, which have plundered or corrupted much of the wealth in society.
“What the most worried the Chinese middle class is the collapse of the economy. They have chosen to ‘lie flat,’ a good way to preserve their wealth,” he said, citing that unlike Western societies, China’s middle class is a very small proportion of the population.
In a society, the more the middle class grows, the more stable the society becomes, according to Mr. Li. On the other hand, a smaller middle class means a wider gap between the rich and the poor, more differences in the needs of social groups, and more social conflicts, he said.
“Nevertheless, no problem can be solved if the CCP system remains unchanged.”
