China’s new economic reality

Summary

Business Daily – China’s New Economic Reality

Host: Rahul Tandon
Date: March 16, 2026
Podcast: BBC World Service

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Episode Overview

This episode of Business Daily explores China’s slowing economic growth, the government’s new focus on stability (“wending”), and the policies unveiled at China’s recent National People’s Congress. Featuring perspectives from economists, entrepreneurs, and young Chinese citizens, the episode provides an in-depth analysis of what these changes mean for China’s economic trajectory, its position in the world, and its people’s day-to-day experiences.

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Key Discussion Points & Insights

1. The Shift from Growth to Stability

• Stability (“wending”) as Policy:

  • China sets a new, lower growth target of 4.5%–5%, the lowest since 1991 ([03:05]).
  • Stability, rather than rapid growth, is now the official strategy.
  • “That seems to be what people want, not necessarily some dream, but some form of steady ground.”
    — Han Lin, Head of Asia Group, Shanghai ([03:56]).

• Economic Reality on the Ground:

  • Ordinary citizens, like taxi drivers, are prioritizing earning what they can rather than aiming for upward mobility.

2. The Property Crisis & Consumer Confidence

• Drop in Asset Values:

  • Widespread loss in home value (down 30–40%) has shaken confidence ([04:39]).
  • Property was central to family financial planning and social status.
  • “You're not really just losing money for a lot of people, you're losing your confidence. And confidence is what's driving the spending.” — Han Lin ([04:39]).

• Impact on Consumption:

  • Consumer spending is cautious and frugal, with shoppers being selective ([05:29]).
  • Frugality is becoming fashionable and even a source of pride.

3. Government Response & Policy Focus

• Approach to the Economic Slowdown:
  • The government views the situation as a “transition, not a crisis” ([06:12]).
  • Not all policy levers are being used; priority is on stimulating domestic services, not just goods.
  • Emphasis on job creation, affordable healthcare, and social services.

4. The Youth Job Market & Social Movements

• Youth Unemployment Crisis:

  • Unemployment for 16–24-year-olds is high: 16.5%, or 25 million people ([06:49]).
  • Sparked the “Tang Ping” (lying flat) movement—youth opting out of the competitive job market.

• Personal Testimony:

  • Extended narrative from a young Chinese woman about her struggle with mental health, falling wages, and the psychological toll of job rejections ([07:40–09:08]).
  • “Even under those circumstances, I still felt that struggling had no meaning. And I felt very lost.”
    — Young Chinese Worker ([08:08]).
  • The rise of “full time children”, where young adults return to live with parents.

5. Entrepreneur and Business Perspectives

• Entrepreneurial Resilience:

  • Despite challenges, some see opportunities for entrepreneurs, especially in entertainment and new business models ([09:33]).
  • Vast internal market means niches can scale rapidly.

• Government Industrial Policy:

  • China supports entire sectors (like EVs and now AI/chips) rather than individual companies ([10:18]).
  • Money is funneled into sectors, fostering intense competition until leading firms emerge.

• Future of Manufacturing:

  • China excels in commercializing technology; will likely lead automation and robotics ([11:46]).
  • “We’re going to move further and further away from humans in factories and everything’s going to be automated. And with the supply chain available for China, I think that's going to happen quite quick.”
    — Stanton, Entrepreneur ([11:46]).

6. Foreign Business Perspective on Chinese Stability

• Attraction to Stability:

  • Business leaders say stability is what their customers and international partners want ([14:29]).
  • “China has been a stable actor on the world stage… you may not like everything this government does here in China, but they are predictable, stable.”
    — Jacob Rothman, President, Velong Enterprises ([14:29]).

• Supply Chain and Business Environment:

  • Some foreign companies that left for Southeast Asia miss China's efficiency and reliability ([15:19]).
  • Tariffs and external politics drive diversification, not internal Chinese difficulties.

7. Long-Term Economic Outlook & Advice for Policy

• Fiscal Policy Recommendations:

  • Economist David Lee advocates for a significant increase in central government debt to boost spending and public services ([16:10]).
  • “The central government debt is just around 26% of GDP… I think policy has tremendous room in China to be more aggressive, more proactive.” ([16:10])

• Signs the Government Will Act:

  • Evidence of more spending on family subsidies, healthcare, education ([17:12]).
  • Change will be “slow and steady”, like turning an “oil tanker” ([17:50]).

• Prospects for China’s Economic Miracle:

  • Lee believes China’s “rapid growth and rapid technological upgrade will continue,” but stresses external challenges may shift focus away from long-term economic decisions ([18:13]).

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Notable Quotes & Memorable Moments with Timestamps

• "The one word that keeps coming up… is a Chinese word called wending, which stands for stability. That seems to be what people want."
  — Han Lin ([01:34], [03:56])

• "For millions of Chinese families, that apartment was their retirement plan… So when you see your main asset lose 30 to 40% of its value, you're not really just losing money… you're losing your confidence."
  — Han Lin ([04:39])

• "My mood was very low … Even under those circumstances, I still felt that struggling had no meaning… I felt being a worker was tragic."
  — Young Chinese Worker ([08:08])

• "There are a lot of opportunities because of the scale of the audience… if you find a niche that works well, it's fast expand … opportunity is there."
  — Stanton ([09:33])

• "China has been a stable actor on the world stage… you may not like everything this government does here in China, but they are predictable, stable."
  — Jacob Rothman ([14:29])

• "To increase massively public debt… the central government debt is just around 26% of GDP… I think policy has tremendous room in China to be more aggressive."
  — David Lee ([16:10])

• "China is like a huge oil tanker… When it makes turn, it makes turn slowly and steadily."
  — David Lee ([17:50])

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Important Segments (Timestamps)

• [01:17] – Episode introduction & key theme
• [03:05] – Official growth target and explanation of “wending” (stability)
• [04:39] – The psychological and financial impact of the property market crash
• [06:49] – Youth unemployment and the “lying flat” phenomenon
• [09:33] – Entrepreneur perspective on opportunities and government sector investment
• [11:46] – Future of manufacturing: automation and China’s competitive advantages
• [14:29] – Foreign company perspective on China’s stability and manufacturing climate
• [16:10] – Economist David Lee's recommendations and analysis of public debt
• [18:13] – Long-term prospects for China’s growth and ongoing challenges

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Tone and Style

The episode maintains a balanced, analytical, and occasionally poignant tone—matching first-hand accounts of economic challenges with big-picture analysis and expert commentary. Insights alternate between personal narratives, expert interviews, and macroeconomic themes.

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Summary

China’s new five-year plan signals a conscious pivot toward stability and self-reliance over breakneck growth. As slowing growth and property woes unsettle consumers, the government stakes its hopes on structural transitions and cautious fiscal expansion. Meanwhile, young people face a tough job market, giving rise to new social trends like “lying flat.” Foreign and domestic business leaders stress stability as attractive, while economists argue that the government has room to do more—though policy shifts are likely to be gradual. The overall message: China remains at a turning point, moving carefully through a new economic reality amid both domestic and global uncertainty.

Transcript

[BBC Advertisement Voice]

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[Rahul Tandon]

Hello and welcome to Business Daily from the BBC World Service. I'm Rahul Tandon. China has been the economic success story of this century, but its economy has now started to slow down and it's just announced its plans to deal with that.

[Han Lin]

So the one word that keeps coming up when you talk to a lot of folks is a Chinese word called wending, which stands for stability. That seems to be what people want.

[Rahul Tandon]

We'll hear from one of the country's leading economists on the economic challenges that the country is now facing.

[David Lee]

So China is like a huge oil tanker. Oil tanker takes time to make a turn. When the mix turn, it makes a turn slowly and steadily.

[Rahul Tandon]

And we'll look at what these new policies mean for the world's second largest economy. Why is China choosing stability over growth? That's all coming up here on Business Daily from the BBC. Those are the sounds from China's recent two sessions meeting. It's the time where every year the country's most important officials gather in Beijing's spectacular Great hall of the People.

[BBC Advertisement Voice]

Now I declare the fourth session of the 14th National People's Congress of the People's Republic of China open.

[Rahul Tandon]

This year is especially important as China has unveiled its five year plan. And as always, the main focus has been on the economy. Let's hear from the country's Prime Minister Li Chung.

[Han Lin]

Main target for development this year include an economic growth of 4.5% to 5%.

[Rahul Tandon]

And that is what has caught the world's attention. China setting its lowest growth target since 1991. Let's put some numbers on that. It's predicted to be 4.5%. Let's be frank. Most major economies would love to have growth like that. But for China, it represents a significant change in policy. And for the first time, we're going to use a word that you're going to hear a lot of in this edition, and that is stability, because that, rather than growth, is what China is focusing on. Let's hear from Han Lin, head of the Asia Group in China. He's based in Shanghai, the country's commercial capital.

[Han Lin]

So there's a sense of quiet resilience going on. So to give you an example, I was riding in a cab about a few days ago, and the driver mentioned that he wasn't going home for the holiday so he could earn more money in Shanghai because the goal was to have more to give when he goes back to his hometown after the holiday. So the one word that keeps coming up when you talk to a lot of folks is a Chinese word called wending, which stands for stability. That seems to be what people want, not necessarily some dream, but some form of steady ground.

[Rahul Tandon]

Is that to do with the property price crash? Are people still worried about spending money when they've seen their asset, their main asset, decline in value?

[Han Lin]

Absolutely. I mean, it's as much psychological as it is financial. So for millions of Chinese families, that apartment was their retirement plan. It was a way to help their son get married. It was a social safety net, the family's crowning achievement. So when you see your main asset lose 30 to 40% of its value, you're not really just losing money for a lot of people, you're losing your confidence. And confidence is what's driving the spending. So I get a sense that that wound is still very raw.

[Rahul Tandon]

So in many parts of the world, as you're in that holiday period, that is the time when people spend a lot of money. As you're walking around China's commercial capital, Shanghai, do you get a sense people are doing that or are you seeing lots of sale signs up discounts to try and entice people to spend more money?

[Han Lin]

You know, I do see a lot of spending, but it's much more selective. It's done smartly. So just yesterday I was sitting at a restaurant and there was a dragon dance and the Dragon started coming around and the whole idea was to try to create noise. And so the owner of the restaurant wanted to create some activity, some excitement, to try to draw people into his restaurant, which was about 90% empty. So I do get a sense that people are much more careful, they're trying to be much more frugal about their consumption. And so there's even a sense of pride and frugality. Now it's almost fashionable.

[Rahul Tandon]

That isn't what the government wants though, is it? How is the Chinese government going to get people to start spending more?

[Han Lin]

The way the Chinese government looks at it right now is that they see the economy as in a transition, not in a crisis. And so they actually are not pulling every single lever they could. They do want to concentrate on the domestic economy, but when we talk about consumption as the area of focus, they're really shifting gears to looking at the consumption of services, not goods. So that really is a different psychology as you start looking at a greater focus and priority on jobs for kids, affordable health care, so on and so forth.

[Rahul Tandon]

And that movement away from growth to stability and a focus on the domestic market is important to China's youth who've been struggling to find jobs. If we look at the latest unemployment figures for 16 to 24 year olds, 16.5% of them are without work. That's about 25 million people. And it's led to the Tang Ping or lying flat movement, where they take a break from work.

[Stanton (Entrepreneur)]

Why even bother?

[BBC Advertisement Voice]

Why not just give up and lie flat?

[Stanton (Entrepreneur)]

Well, you can just become a kid again. Meet China's full time children.

[Young Chinese Worker]

The problem is many of them have no jobs to enter.

[Stanton (Entrepreneur)]

Traditional pictures of students throwing their hats

[Young Chinese Worker]

and gowns in the air have been replaced by photos of them lying on the ground.

[Rahul Tandon]

These young people are part of that movement.

[Young Chinese Worker]

Last year, I was extremely mentally broken, completely collapsed. Every day I did nothing at home, but I could only sleep a few hours. I didn't have much appetite to eat either. My mood was very low because I always worked in sales. My income was actually relatively good compared with girls of my age with the same background. Coming from the countryside with an ordinary bachelor's degree, I also had some savings. But even under those circumstances, I still felt that struggling had no meaning. And I felt very lost. During the pandemic, my salary dropped from 10,000 yuan to around 2,000 per month. I couldn't even cover rent comfortably. I wanted to lie flat. In Chengdu last year, I felt being a worker was tragic. Wake up early, repeat the same tasks, little salary no value. After returning home, life was comfortable. I felt like a full time daughter. Not working, just living with my parents. Cooking, drinking tea, walking. I told myself, enjoy the present, but later think about the future. My parents were worried I wasn't doing anything. Though they didn't show it, I realized life's simple pleasures matter. Sunsets, flowers, clean sky. Things I hadn't appreciated before. Two years ago, sending 10 resumes, got six, seven interviews and one or two offers.

[Rahul Tandon]

Now I sent over 40 resumes in two weeks. Only two interviews, many rejections.

[Young Chinese Worker]

Style mismatch, experience mismatch, project mismatch. It's harder now. I'm not actively choosing to be a full time daughter. The job market forced me to stay at home.

[Rahul Tandon]

So what do businesses make of this environment and the new policies? It's not easy to speak to companies in China, but we've spoken to an entrepreneur called Stanton who's in Shanghai. We're not using his full name.

[Stanton (Entrepreneur)]

I think there's a lot of opportunities still because for example, younger people, although there is an impact on the jobs market, but there's a lot more entrepreneurs coming out of them. They're looking at new business models, a lot are focusing on entertainment options. There's a lot of new ideas that are coming out. So there are a lot of opportunities because of the scale of the audience. So if you find a niche that works well, it's fast expand, there's an opportunity to make a lot of money. So from that perspective, opportunity is there.

[Rahul Tandon]

We have seen the Chinese government really help the manufacturing sector grow, haven't they, with the support that they've given? Do you see that continuing? Do you think the government's doing enough to support business at the moment through what has been a challenging period?

[Stanton (Entrepreneur)]

I think the way that the government works, it's interesting because the government supports a specific industry, they don't support specific companies. And so what they do is they incentivize investment into a specific sector, throw so much money at it that a bunch of companies come out of that sector and then after that they let them fight it out. So the best rises out. I think EVs would be an example of this. Every province in China had an investment fund for EVs and so they were investing and then now we're at the point where we're just cutting them down, where only the top 10 or 15 are going to survive, the others are not going to survive, but the technology is there. Because the way that China manufacturing works is that if you're an EV manufacturer, you need A supply chain of hardware, software that fulfills the requirements of building the car. And once you have enough money going to the supply chain, then the industry will now exist. China's going to continue doing that. Every time they find a new sector that they think is worth investing in right now, it's probably AI and chips. They're going to funnel money into that sector, let a bunch of companies get created and then die off. And then at that point they'll have a couple companies that will lead the industry.

[Rahul Tandon]

We've seen China dominate manufacturing. It's been the economic story of our time. Can they continue to do that in those sectors that you're talking about, the new sectors that are arising?

[Stanton (Entrepreneur)]

One thing that China I think is quite good at, possibly because of the way that the Chinese people work, they work longer hours as part of the current society culture. That's the way it's set up. They're very good at commercializing technologies. And so what we're seeing with AI and robotics, because there's a manufacturing kind of support for that, they're going to be iterating extremely quickly. And in the long run, manufacturing is going to go towards robotic manufacturing companies completely. So we're going to move further and further away from humans in factories and everything's going to be automated. And with the supply chain available for China, I think that's going to happen quite quick.

[Rahul Tandon]

Stanton there an entrepreneur in Shanghai. You're listening to Business daily on the BBC World Service.

[BBC Advertisement Voice]

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[Rahul Tandon]

I'm Rahul Tandon, and we're looking at China's latest economic plans as the country's growth rate slows down. Let's return to the issue of stability. Yes, we're using that word once again because it's and self reliance were the key takeaways from the two sessions. It may not sound as exciting as growth, but in an increasingly uncertain global economic climate, is it a policy that will continue to attract companies to China? Jacob Rothman is the president of the Shanghai based Velong Enterprises, a manufacturing company which has factories in China, India and Cambodia.

[Jacob Rothman]

From our perspective, what China is doing now is what they should be doing. Our customers want stability. China has been a stable actor on the world stage, and in comparison to President Trump's administration, is a breath of fresh air. You may not like everything this government does here in China, but they are predictable, stable. And you see now countries coming here in greater numbers wanting now to partner with Beijing because you can't partner with President Trump's administration. What they're doing now, just being stable players on the world stage is about the best that we can hope for.

[Rahul Tandon]

President Xi and President Trump are expected to meet in Beijing at the end of March. Tariffs, of course, will be at the center of those discussions. If they remain, though, will companies continue to move away from China to Southeast Asia?

[Jacob Rothman]

No, honestly, I don't think it's becoming too difficult at all for foreign companies to come into China. If anything, those who have moved their manufacturing outside of here to Southeast Asia and other countries, I think they're realizing how good they had it here. It's just easier. Products are on time, they're more competitive, developing speeds are faster. And I think it's not so much that it's getting more difficult here. I think that the world is just becoming more diversified. But the difficulty isn't coming from China. It's mostly coming from President Trump and the world that he is having us all live in.

[Rahul Tandon]

The two sessions ended last week, so we are, in effect, in a new era of Chinese economic policy. One of those who has been advising the government on it is the economist David Lee. So what should the government do to boost growth?

[David Lee]

The simple, simple solution which I've been proposing, and most economists agree, is that to increase massively public debt. I'm talking about central government debt. The central government debt is just around 26% of GDP 2,6 as compared with Germany's 111, US 120. And meanwhile, let's don't forget the Chinese central government is by far the richest, the wealthiest central government in the world having about easily 80 to 90% of GDP in the amount of state owned enterprises. So I think policy has tremendous room in China to be more aggressive, to be more proactive.

[Rahul Tandon]

Have you seen anything in this? Two sessions and it's an important one because it's unveiled a five year plan that leads you to believe that the government is going to go down the line of increasing debt.

[David Lee]

I strongly believe so, yes. One sign is that the government says again, again that it will provide public service for people to be able to consume more. The government announced again and again that it will increase subsidies for families to have kids. And the government also announces that it will increase expenditure on medical care, on actual education. So things are coming. However, it's slow. So China is like a huge oil tanker. Oil tanker takes time to make a turn. When it makes turn, it makes turn slowly and steadily.

[Rahul Tandon]

You have been part of advising those in power about economic policy over the last few years and China has been the economic success story of our time. Do you think that success story is going to continue or are we looking at a new era for the Chinese economy which is going to be more difficult?

[David Lee]

To give you a very simple answer, yes. The so called economic miracle that is rapid growth and also rapid technological upgrade will continue. However, they are facing a lot of other challenges including international relations, dealing with the US and also facing a lot of uncertainties like the ongoing war against Iran by the US and Israel. Okay, so they are overwhelmed by all these daily challenges for the economic issues we're talking about consumption, issuing debt and collecting tax tomorrow are becoming relatively less urgent. So I think that's the current situation. We are overstretched. Everybody is overstretched, including in the UK and in Australia, all over in Europe. Everybody is overstretched by short term issues or short term crisis and long term economic decisions are put in the back burner.

[Rahul Tandon]

As we heard from David there, the Chinese economy is like an oil tanker that is turning. The question is, will it move quickly enough to meet the growing economic needs and demands of more than 1.4 billion people.

[BBC Advertisement Voice]

I hereby announce the fourth session of the 14th National People's Congress of the People's Republic of China is now closed.

[Rahul Tandon]

Thank you for listening to today's edition edition of Business Daily from the BBC World Service. The producer was David. Can you can get in touch with the team? Our email address is business [e-mail].

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