To the residents and business owners of Chedun, a working-class neighborhood in the southwestern outskirts of Shanghai, the signs of an anemic economy are all around. The factories that once drew workers from around the country have moved away. Those that remain have slashed wages. Around the affordable eateries and motley shops where workers once crowded, employees eagerly latch onto anyone passing by.
“No one has money now, it’s obvious,” Cherry Qian, 25, said as she sat inside the electronics store she manages, which on Sunday afternoon had seen only one customer.
But there’s one place the downturn isn’t as obvious: in the government’s account of it.
A gulf has emerged between the Chinese economy as many Chinese are experiencing it, and Beijing’s narrative of it — and that gulf is only widening. For many ordinary Chinese, one of the worst economic slowdowns the country has faced in decades has translated into widespread pessimism and resignation. But state media and officials continue to declare that any challenges are blips.
Concerns about the economy, propaganda outlets have insisted, have been inflated by Western politicians and media outlets engaged in “cognitive warfare.” One social media account backed by China’s state broadcaster released a video that purported to investigate how foreign news outlets had cherry-picked statistics that predicted higher economic growth, just so they could later say China fell short. “At the end of the day, they are fated to be slapped in the face by reality,” a spokesman for China’s foreign ministry said this month about the purported Western naysayers.
When the reality has proved too inconvenient, another approach has simply been to conceal it, as when Beijing this month stopped publishing the youth unemployment rate, which had been at a record high. The decision was widely mocked by Chinese social media users, who joked that the government had finally landed on an effective fix.
Differing official and on-the-ground narratives are hardly new in China, with its tightly controlled censorship apparatus. But the contrast is especially stark now, when the public’s gloom is so widespread, from the wealthy elite to factory workers.
A housing crisis has left many middle-class Chinese who poured their life savings into apartments reeling. Government crackdowns on various white-collar sectors, from education to technology, have spurred layoffs at major corporations. Foreign companies have pulled back from investments in China, leading to less work for factories, plunging paychecks for workers and falling consumer demand.
“I tried many times and just couldn’t find one I wanted,” Zhu Xunyang, 19, said of his search for a summer job at a factory in Chedun while home from university. Either the salary was too low, or the factories didn’t want him, he said.
“So I kind of wanted to just give up,” he said as he played games on his phone in the metalware shop his parents run. “And I did.”
Many skeptical or outright scornful comments about the economy on social media have escaped the censors, perhaps because they are so common.
“That sense of insecurity is almost universally shared within China now, across all walks of life,” said Chen Zhiwu, a professor of finance at the University of Hong Kong. “And that is why the government has been using all the official media and all other tools to convey a positive, optimistic message.”
The malaise is especially striking compared to the optimism many Chinese felt earlier this year, after Beijing finally abandoned coronavirus restrictions that for three years had left many people unable to leave home and unwilling to spend.
Ms. Qian, the electronics store manager, had hoped to buy a new car before her wedding later this year. But after seeing how business had flagged — she saw around 20 customers a day last year, she said — she abandoned that idea.
“It’s to prevent risk,” she said. “Before, you could buy a house as an investment. Now, nobody dares buy a house, or to casually buy anything big.”
A few blocks away, Zhang Jiaojuan and her husband were wondering whether people would venture to buy anything small, either, as they mixed chives and meat for orders that had yet to materialize at their dumpling store.
They had not planned to be entrepreneurs: Last year, they worked at an auto parts factory, earning between $800 and $1,000 a month, about the average per capita income in Shanghai. But this spring, wages fell to about $550, so low that the couple decided they might as well try to start their own business. They invested their life savings of about $27,000, thinking of the lively crowds that had filled the cramped storefronts hawking noodles, spicy duck necks and roast meat in the prepandemic years.
“And then we found out business is bad here, too,” said Ms. Zhang’s husband, who gave only his surname, Xue.
“People don’t spend money like they did before the pandemic, where they’d buy whatever they want,” Ms. Zhang said, as their teenage son slouched at one of the empty tables, playing with his phone.
They had cut back on their own spending, too. Mr. Xue said he had essentially stopped buying fruit, limiting himself to staples and vegetables. “We thought if we just got through those three years, and worked hard, there would definitely be hope,” he said. “And then it turned out that when the pandemic ended, things just got worse.”
Officials have acknowledged that the economy is facing new challenges, describing the recovery as “wavelike” while maintaining that the overall outlook is positive. But the remedies they have offered are unlikely to be effective, economists said.
Despite urging consumers to spend more, the government has rejected the idea of cash handouts to households, calling it too costly. It has brandished tax incentives for purchases of new homes, even as it has continued to erode the already weak social safety net that makes many Chinese leery of big purchases.
On Monday, the Ministry of Finance halved the tax on stock transactions, in an attempt to boost investor confidence. But that would not remedy how unwilling people are to buy stocks in the first place, given a lack of faith that they would grow in value, said Professor Chen: “When the future is so uncertain, then it does not matter what kind of transaction costs you charge.”
“Detachment” between the top leadership and the reality of many Chinese, he added, “is clearly there.”
The government’s blame of external forces for the slowdown does have supporters. Wang Ainian, a barber in Chedun, pointed to news reports about the trade war with the United States and Japanese restrictions on the export of computing chips, when asked why business had slowed at local factories.
The economic pain has also been spread unevenly across the country. The wealthy, more insulated from uncertainties, continue to spend on luxury goods. Many malls and train stations are bustling again, though most shoppers and travelers are spending less and choosing cheaper destinations. Among some lower-income Chinese, familiarity with hardship has also blunted the pessimism of the recent downturn.
But even for Mr. Wang, no matter who is responsible for the economic pain, he had little hope that it would reverse itself soon. He was seeing only about two-thirds of the customers that he had the year before, and half of prepandemic levels. And that was in a world-class city like Shanghai, not his hometown in inland Anhui Province.
“Shanghai is a place people dream of, and the population was always growing,” he said of Chedun. “But now it’s not.”
For others, the official explanations hardly register. A few blocks away, a 33-year-old clothing shop owner who gave her surname, Tang, said she did not pay attention to news about the economy. But she did spend a lot of time on Xiaohongshu, a Chinese social media platform similar to Instagram, where she tried to collect business tips from other clothing store owners. Most of the posts from them, though, were lamenting how bad their own business was.
Li You contributed research from Shanghai and Siyi Zhao from Seoul.