While official metrics and technological advances project an image of resilience, China's economy is grappling with a profound sense of strain felt by millions of its citizens, caught in the grip of a protracted property market downturn.
The Divergence: Macro Data vs. Micro Reality
On the surface, key economic indicators present a robust picture. Chinese exports reached a record $3.4 trillion in the first eleven months of 2025, with shipments to Southeast Asia and Europe helping to counter a sharp decline to the United States. Breakthroughs in government-backed sectors like artificial intelligence and electric vehicles are also driving growth in specific industries.
However, this macro-level strength starkly contrasts with the financial anxiety permeating households. Retail sales growth slowed to just 1.3% year-on-year in November 2025, down from 2.9% in October, signalling weak consumer confidence. Fixed-asset investment fell by 2.6% over the same eleven-month period.
"The fundamental issue is that people don't have money," said Beijing-based commercial property agent Zhang Xiaoze, whose annual income has plummeted from a peak of nearly 3 million yuan to around 100,000 yuan. He now sometimes must dip into savings to support his family.
The Property Anchor Dragging on Confidence
The core of the distress lies in the real estate sector, which represents the primary store of wealth for most Chinese families. Since peaking in 2021, housing prices have fallen by 20% or more. New home sales by value dropped 11.2% year-on-year in the first eleven months of 2025, while property investment fell nearly 16%.
This depreciation has a direct, chilling effect on spending and sentiment. Xiao Feng, a Beijing billiards hall owner, bought an apartment for over 3 million yuan in 2019, now worth significantly less. "If my apartment hadn't depreciated so significantly, I might have already bought a new one," he said, adding he now drives a ten-year-old car with no plans to replace it. He has also cut all tutoring for his son, teaching him himself instead.
The ripple effects are widespread. A tutor in Tianjin, surnamed Zhou, reported his income falling by more than a third as parents opt for cheaper group classes over one-on-one sessions. "Business is much worse than before -- about 50 percent worse than during the COVID period," he stated.
Growth Forecasts and Structural Challenges
Despite the domestic challenges, the International Monetary Fund recently raised its 2025 growth forecast for China to 5%, aligning with Beijing's official target. Banks like Goldman Sachs have also revised predictions upwards.
Yet, independent analysts are more cautious. Capital Economics suggests the actual growth rate may be "well below" official data, estimating a pace of 3% to 3.5%. The Rhodium Group places it between 2.5% and 3%. This gap highlights the disconnect between headline figures and ground-level experience.
Economists warn that growth is likely to slow further in 2026, with excess supply in industries like autos and steel depressing prices. China's growing trade surplus, exceeding $1 trillion in 2025, also risks fuelling protectionist backlash abroad.
As ING's Chief Economist for Greater China, Lynn Song, notes, the economy is in a 'Great Transition'. While the AI boom has boosted stock markets, the wealth effect has not trickled down to the average citizen. For small business owners like Zhai, who runs a budget hotel in Shijiazhuang, the outlook remains bleak. "I don't see an immediate rebound," he said, contemplating closure if things don't improve by mid-2026. The resilience of China's economy, it seems, is being defined by a battle between its high-tech future and the weight of its property-laden past.
