The Crisis of Confidence in China’s Economy: A Growing Lack of Faith Among Consumers and Businesses

China’s once unstoppable economy is now facing a crisis of confidence as a series of crises, including a real estate crisis and record joblessness among the youth, have plagued the nation. The lack of faith in the future prospects of the Chinese economy has resulted in consumers holding back on spending and businesses being reluctant to invest and create jobs. This downward spiral is fueling low confidence, further exacerbating the economic challenges. Investors have pulled over $10 billion out of China’s stock markets and stocks in Hong Kong have fallen into a bear market. The erosion of confidence is a departure from China’s past resilience and is attributed to the limited options policymakers have to fight the downturn. Policy changes by President Xi Jinping’s government, such as the “zero Covid” lockdowns and crackdowns on the technology industry, have also contributed to the current economic troubles. The government’s response has been to focus on “boosting confidence” without providing concrete measures. In an effort to downplay the economic troubles, the government has stopped announcing troubling economic data, including youth unemployment figures and consumer confidence surveys. The removal of these indicators has only deepened concerns and uncertainties among the population. This crisis of confidence is taking a toll on individuals like Laurence Pan, who has struggled to find new employment amidst the economic downturn and has been forced to cut back on spending. With no immediate solutions in sight, the future of China’s economy remains uncertain.