In order to meet the country’s economic challenges, the senior Xi Jinping leader recently met the Chinese giants of the private sector. He tried to minimize the problems, stressing that “Certain difficulties and challenges faced by current private economic development generally appear in the process of reform and development and processing and industrial upgrading.” According to XI, these problems are “partial rather than complete, temporary rather than in the long term, and can be overcome rather than being insurmountable”.
China, the second world economy in nominal terms and the greatest economy of purchasing power parity (PPP), is currently struggling with a series of challenges. These difficulties result from the policy changes initiated at the end of 2019 to restructure the economy. Despite its increase in global importance, China’s economic growth rate culminated in 2007; In recent years have experienced a significant decrease in its economic performance. In 2024, China’s economic growth projections were modest, with the International Monetary Fund (IMF) providing for a growth rate of only 3.3% by 2029.
One of the most worrying indicators of China’s economic health is the decline in private investment. According to reports, China’s private investment has decreased From 0.1% in annual shift in 2024. This reduction is notable because it reflects a drop in the proportion of private investment in the total investment of fixed assets, which increased from 56.42% in 2019 to 50.08 % at the end of 2024. This marks a significant change in the dynamics of the economic structure of China, where private companies have long been crucial by economic growth.
XI and entrepreneurs
The private sector contributes 60% of Chinese GDP, 70% of innovation, 80% of urban employment and 90% of new jobs. It also represents 70% of the investment and 90% of exports. However, due to the policy change at the end of the 2010s, the Chinese private sector, in particular the real estate sector, faces serious challenges. The technological sector has also faced regulatory challenges since Xi took the initiative to revise the industry.
In the midst of these challenges, XI took proactive measures to initiate the business sector. On February 17, he attended a high -level symposium bringing together some of the most eminent business leaders in China. This meeting aimed to formulate strategies to combat the economic stagnation that China has experienced in recent years.
The rally brought together main personalities such as Prime Minister Li Qiang, Wang Hunning, head of the Political Consultation Conference of the Chinese People (CPPCC), and the Vice-Prime Minister Ding Xuexiang. The main leaders of companies such as Lei Jun (founder of Xiaomi), Pony Ma Huateng (founder of Tencent), Jack Ma (founder of Alibaba Group) and Ren Zhengfei (founder of Huawei Technologies) were also present. In another sign of its importance, the meeting was also highlighted by the Chinese state media. CCTV broadcast a 40 seconds video showing the procedure.
Similarly, before the third plenary session of the 20th party congress in May 2024, XI had summoned another symposium with the entrepreneurs and economists of the Shandong province. The involvement of these business leaders highlights the importance of public-private partnerships in the fight against economic problems with which China is confronted. Given that the private sector of China has long been considered a key engine of growth, government collaboration with figures for influence on businesses could be crucial to help the country resist its economic difficulties.
Interior challenges in China
China is faced with various internal challenges that exacerbate its economic slowdown. One of the most urgent problems is the country’s demographic trends. Weddings in China dropped dramatically, with a 20% drop recorded in 2024 compared to the previous year. Out of 7.7 million marriages in 2023, the number dropped to only 6.1 million in 2024, less than half of the number observed in 2013. This marks a low historical rate in marriage rate since records hold started in 1986.
The demographic discrepancy is further aggravated by an increase in the divorce rate, with 2.6 million couples depositing the divorce in 2024, an increase of 1.1% compared to 2023. This demographic decline is not only the result of The evolution of cultural attitudes towards marriage, but also the reflection of a broader societal society.
In the midst of a slowdown in marriage and the birth rate, the Chinese population is growing quickly. The share of people aged 60 and over has increased regularly over the past two decades, from 11% in 2004 to around 21% in 2024. The aging population has challenges for the labor market, social protection systems and overall productivity of the economy.
In addition to these demographic problems, China is faced with a growing national debt burden. In 2004, public debt represented only 26% of China’s GDP. In 2014, this increased to 40% and, in 2024, public debt had reached 84% of GDP. The increase in debt levels adds another layer of complexity to the economic situation of China, because the country faces pressure to balance its tax policies with the need to maintain economic growth.
Young unemployment is also a serious concern. THE unemployment rate Among young people in China, he regularly increased, reaching 15% in 2024. Social, contributing to social disorders and dissatisfaction.
In addition, China is experiencing a A sharp drop in foreign direct investment (IDE). In 2024, Chinese IED levels fell to the levels observed for the last time in 1993. This drop is alarming, because China has long been on the IED to fuel its industrial growth and its global integration.
The housing sector, formerly a major engine of economic growth in China, has also encountered significant difficulties in recent years. Since 2020, the Chinese government “Three red line policy “ And a repression against real estate developers has seriously had an impact on the real estate market. Before repression, the Chinese real estate sector was estimated at around 15 billions of dollars.
The stricter regulations have led to a loss of around 18 billions of dollars of household wealth. Real estate prices dropped up to 30% compared to their summit in 2021, and the contribution of the Housing Sector to GDP increased from 24% to 21%. This contraction in the real estate sector has had training effects in the economy, reducing consumer confidence and slowing down overall growth.
Internationally, external pressures have still held the economic situation of China. In October 2024, the The EU has introduced prices As much as 45% on Chinese electric vehicles (electric vehicles), invoking concerns about subsidies and overcapacity. This decision added to the economic problems of China, especially since it seeks to extend its EV market.
The economic challenges of China are complex and multiple, including demographic challenges, the increase in debt levels, unemployment of young people and a declining real estate sector. While the Chinese government is working hard to solve these problems, the road to come remains difficult. The country must navigate in complex interior challenges while responding to the increase in external pressures. The economic slowdown is not only a temporary setback, but a sign of deeper structural problems which can take years to solve. As China advances with its restructuring policies, the world will watch closely to see how it manages these obstacles and if it can again achieve sustainable economic growth.