In 2004, as China’s economy was emerging as a global force, a team of researchers began conducting a nationwide survey asking Chinese people whether they were better off financially than they had been five years earlier.

The proportion who considered themselves wealthier rose in a survey five years later, then climbed again in 2014, reaching a high of 77%.

Last year, when respondents were asked the same question, that number dropped to 39%.

The study, titled “A Step Ahead in Today’s China: From Optimism to Pessimism,”investigationThis reflects a new reality. The Chinese economy is facing a crisis that it has never experienced in more than 40 years of opening up to the outside world. The rebound after the COVID-19 pandemic should have brought the economy back to life, butIt looks more like much thunder but little rain.

A few years ago, the Chinese government was determined to wean the economy off its overheated property market, which propped up Chinese households’ savings, China’s banking sector and local government finances. Now the industry is in crisis. Developers are collapsing, leaving behind huge debts, a string of failed investments, unsold apartments and jobs.of loss.

BookChinese consumers, already prone to saving heavily, have become more frugal. Companies that have endured the worst of tough anti-epidemic measures have cut wages and scaled back hiring. Millions of college graduates have entered the job market, facing difficulties and bleak prospects. China’s population has shrunk for two consecutive years. In a country where most people have known only that the economy will grow rapidly and living conditions will improve, confidence is eroding.

Shirley Yang started a business making shop signs, billboards and posters in Sichuan Province in southwestern China in 2006. Within a few years, orders were pouring in from local companies, and Yang had 16 employees and the printing presses were running around the clock.

But she said the business never fully recovered after the coronavirus pandemic. Already low demand worsened this summer; sales in July were down 70% from the same period last year. “It feels like every industry is struggling and no one is spending money,” said Shirley Yang.

Shirley Young is now down to six employees, many of whom spend their days on their phones because there isn’t enough work.

“This has been the hardest year since we opened,” she said.

Consumer spending, seen by Chinese authorities as a key driver of growth, remains weak across the economy.

Some foreign companies that once rushed to enter China to catch the wave of China’s economic rise are now cutting back. Last month, Sephora, a cosmetics retailer owned by French luxury group LVMH, announced that it was laying off employees due to a “challenging market.” IBM will close two research and development centers in China.

Policymakers are also hampered when they try to respond because they can’t rely on major solutions that have worked in the past. For years, local governments borrowed money to fund sprawling development projects that kept people working and construction booming — even though not as much infrastructure was needed.

The debt, often borrowed through opaque financing channels, has ballooned to more than $7 trillion. With investors already nervous about China’s financial system, the days of heavy borrowing for infrastructure that has no real demand are unlikely to return anytime soon.

Seeking to quell talk of a major economic crisis, officials have warned some economists not to publicly compare China’s problems to the bursting of Japan’s debt-fueled real estate bubble in the 1980s, which weighed on the economy for decades.

Yet China’s debt problem is hard to ignore.

Although the collapse of the real estate sector has caused great collateral damage, the risk of bankruptcy is minimized by China’s tightly controlled financial system. The danger is that the government may have fewer fiscal resources to prevent worse.

“The consequence of this fiscal crisis is slower growth,” said Alicia Garcia-Herrero, chief economist for Asia Pacific at investment bank Natixis.

Foreign funds become net sellers of Chinese stocks in 2024, which would mark the first annual outflow since data became available a decade ago. Shares of about 180 Chinese companies have been removed from a major stock market index since the start of the year, reducing the presence of Chinese companies in global benchmarks.

Investors have retreated to the safety of China’s bond market, pushing up prices and pushing down yields. But even there, there are potential risks. Yields have fallen so much that China’s central bank now worries that banks could be hit if interest rates rise in the future.

Chinese InvestorsAlso bought a lot of goldpushing gold prices to a record high.

China had forecast its economy would grow by around 5% this year, faster than most major economies, though that forecast may now be in doubt. A record surge in exports andDumping electric cars, batteries and home appliances around the world has fueled China’s economic growth, but the resulting oversupply has also dented profitability in the high-tech manufacturing sector that China had hoped would soften the blow of its painful transition away from a property-led growth model, and has drawn opposition from a growing number of major trading partners.

But the fundamental problem remains.

There aren’t enough jobs for a large number of young people. The unemployment rate for young people aged 16 to 24 in China jumped to more than 17% in July from 13% in June.

Winnie Chen, who studied auditing and graduated this summer in the southeastern Chinese city of Nanchang, took the civil service exam in March but failed, competing against hundreds of applicants for each position.

She began looking for work in the private sector. Winnie Chen sent messages to 1,229 companies through a job search app and applied for 119 positions in industries such as accounting, e-commerce, and social media. She said that after dozens of interviews, she got some job offers, but the conditions were “outrageous.”

One of the jobs had a starting salary of about 2,700 yuan a month, which she thought was too low to live on. Another company offered her a job but said she would have to work on public holidays and could not take time off. She was also offered a position as a makeup artist but turned it down after learning she would actually be working in a nightclub.

“It feels like there are too many college graduates now, too many people but too few jobs,” Winnie Chen said, noting that many of her classmates are unemployed. “The economy is bad.”