China's Economic Growth Turns to Despair, Political Changes Await

China’s economic downturn has left both major cities and remote towns struggling, with malls and markets facing a wave of closures and street vendors outnumbering customers. Many people have fallen into despair as a result. (Video screenshot)

[People News] As 2024 comes to an end, those who had hoped for a miraculous rebound in China’s economy this year are now left in despair. Commentators have pointed out that 2024 witnessed the "collapse of two illusions" regarding the Chinese economy.

Wang He, a North American political commentator, recently told Epoch Times in an interview: "The first collapse is the myth of China’s so-called ‘economic growth miracle.’ The second is the disillusionment with the Chinese Communist Party’s ability to save the economy." Wang said that while China’s economy was already in dire straits in 2023, many people entered 2024 with some lingering hope, believing that the Chinese Communist Party (CCP) would introduce significant policies to revitalize the economy. However, by the end of 2024, the CCP has proven completely incapable of taking effective measures.

Wang He stated, “The CCP’s current policies, including measures introduced at the end of September, are largely performative and difficult to implement. Judging by 2024, the CCP is heading toward rapid collapse, closely resembling the Soviet Union’s economic crisis before its disintegration.”

China’s November 2024 economic data was released, revealing much worse-than-expected consumption figures, continued declines in real estate and foreign investment, and stagnant private investment. Additionally, the Producer Price Index (PPI) has been in decline for 26 consecutive months. According to data from China’s National Bureau of Statistics, November’s total retail sales of consumer goods grew by only 3%, the slowest growth rate in three months and far below the expected 4.6%. This figure also fell short of the 3.3% average growth rate for the first three quarters of 2024.

The real estate sector, critical for restoring consumer confidence, remains sluggish. In the first 11 months of 2024, nationwide real estate investment fell by 10.4% year-on-year, while the sales area of newly built commercial housing decreased by 14.3%, and sales value dropped by 19.2%. The area of unsold commercial housing increased by 12.1% year-on-year. Furthermore, new housing construction dropped by 23%, and completed construction fell by 26.2%.

Wang further noted that during the 2008 global financial crisis, the CCP introduced a 4 trillion RMB economic stimulus package, enabling a smooth economic transition while leaving behind significant debt and overcapacity. Many had hoped for another round of “flood-like stimulus,” but foreign investors have come and gone throughout 2023 and 2024 because they no longer trust the CCP’s ability to revive the economy.

Wang explained that the CCP has lost policy flexibility for two reasons: firstly, International Pressure: The CCP insists on maintaining a hardline stance against the United States. With Trump poised to return to office, U.S.-China economic relations will undoubtedly become more strained. There is even a possibility that the U.S. may revoke China’s Most Favored Nation trade status. Secondly, Domestic Policies: Xi Jinping has taken a leftward turn domestically, pursuing policies such as “state advances, private retreats” and declaring that “what cannot be changed must resolutely remain unchanged.” This leaves no room for private enterprise to thrive. "China’s economic stagnation is the inevitable result of the CCP’s ideological rigidity and inflexible policies," Wang concluded.