THE DRAGON HAS NO TEETH:
China’s Long-Promised Consumer Boom Is a Mirage (Anne Stevenson-Yang, 3/13/26, NY Times)
Even if Communist Party leaders want to unleash more spending, formidable obstacles stand in the way, including a work force increasingly trapped in insecure, low-wage employment, a rapidly aging and shrinking population and a weak social safety net that encourages people to save for emergencies.
China’s people, perhaps more than at any time in the last few decades, are in no mood to go out and splurge. Many have been airing growing anxiety online, posting about falling incomes and scarce jobs. The average income was just over $500 a month in 2025. Unemployment is high.A fundamental shift that has taken place in China’s labor market is the root cause of these problems.
Since the early 2010s, intensifying global economic competition, automation, the pandemic-era closure of countless businesses, slowing economic growth and China’s protracted property slump have all combined to eliminate millions of manufacturing and construction jobs. This has driven countless workers into a growing service sector that requires fewer skills and offers lower pay.
An estimated 200 million people, or at least one-quarter of China’s work force, are now engaged in insecure “gig” employment — delivering meals or packages, driving ride-hailing cars, selling goods online or doing other short-term work. According to a study last year, nearly half of gig workers have little to nothing in the way of a social safety net — which would include health care, a pension, unemployment benefits, maternity benefits and secure housing. The problem is worsened by chronic government underinvestment in social services. On top of that, advances in technology have given companies a precise view of seasonal demand and simplified recruiting, enabling them to hire and fire workers as needed.
Adding to worker insecurity is China’s household registration system, which restricts access to social services like schooling and health care outside one’s hometown. This effectively ensures that people from China’s vast countryside serve as cheap migrant labor for megacities like Beijing, Shanghai and Shenzhen. Reform of the registration system has been discussed for decades, but eliminating it would shift enormous welfare costs onto those cities, which currently reap benefits from migrant labor without shouldering social costs.These are hardly a foundation for a vibrant consumer economy, and the future is not looking better.