Since the reform and opening up of the economy, over 40 years have passed, and China is now facing the worst economic downturn it has ever experienced. Overcoming the current economic crisis will not be easy. This diagnosis has emerged, particularly highlighting the seriousness of the situation, as Chinese people's expectations for the Xi Jinping government have diminished. The New York Times has analyzed the current economic crisis in China, and we will discuss it now.

On the 4th, the New York Times published an article titled Reasons Why China Struggles to Recover from a Weak Economy, diagnosing that due to the collapse of the real estate market, consumers have become cautious. Research on the economic perceptions of Chinese people began in 2004 when China was seen as the driving force of the global economy. Five years ago, the percentage of respondents who reported an increase in income peaked at 77% in 2014, but this figure dropped to 39% last year.

It has sharply declined. Meanwhile, the proportion of people in China who feel they are wealthier compared to the past has significantly decreased over the past ten years. The New York Times reported that this survey result indicates a new reality in which the Chinese economy is facing a crisis, similar to the one it faced over 40 years ago, specifically since 1978 when it opened up to the world after the U.S.-China relations changed. The New York Times pointed out that the biggest factor leading to the crisis in the Chinese economy is the prolonged stagnation in the real estate sector. This has been something our newspaper has pointed out several times as well. In other words, no matter how much the Xi Jinping administration tries to stimulate the economy through other means while sidelining the real estate issue, it is impossible. Our newspaper has highlighted this point multiple times. However, the New York Times also noted that the Chinese economy has fundamentally relied on policies heavily dependent on the real estate sector, especially at the local government level.

Using this, China has been able to expand its finances, and based on this, the Chinese economy has grown. It has been pointed out that real estate, which supported household savings, the banking sector, and local government finances, is currently facing issues such as the collapse of developers, massive debts, unsold apartments, and job losses. The Chinese government has attempted to reform its overly dependent economic system on the real estate sector, but because it approached the issue in a clumsy socialist manner, the long-standing problems erupted all at once, resulting in a situation where the Chinese authorities are practically unable to intervene. The real estate sector has dominated personal savings, finance, and local government finances. As the Xi Jinping administration has forced reforms, issues have arisen, leading to a situation where the real estate sector is in turmoil. Ultimately, development companies have gone bankrupt, leaving behind massive debts, and investment has continued to decline, with newly built apartments remaining unsold.

The jobs have decreased, and many have been left behind. In this situation, one of the real headaches for the Chinese authorities is that the debt in the real estate sector has snowballed, leading to a staggering $7 trillion, approximately 99.6 trillion won, in excess investment-related debt. The bankruptcies of real estate companies are causing a chain reaction of damage, and the Chinese government, which controls financial institutions, is trying to minimize corporate liquidations. The problem is that the Chinese government may soon run out of the financial capacity needed to revive the economy. In this regard, Elisa Garcia Aero, the Asia-Pacific economic chief at Natixis, pointed out that growth is being hindered by the financial crisis. The real issue is that the Xi Jinping administration has not calculated how the collapse of the real estate market and market opening will affect the Chinese economy. Nearly 70 to 80% of the assets of Chinese households are tied up in real estate.

The collapse of real estate has plunged the Chinese economy into a deep crisis, something the Xi Jinping administration could never have imagined. This indicates just how ignorant the Chinese government has been about the economy. As a result, the Chinese people found themselves in a situation where their assets plummeted, in some cases losing up to 70% of their value. Consequently, consumer sentiment began to freeze completely. Even among those who value savings, Chinese consumers have become even less inclined to open their wallets. The problem is that the cooling consumer sentiment has immediately affected businesses. As consumers tightened their belts, companies began to see a sharp decline in sales, leading them to cut wages and reduce employment. This fallout quickly turned into a job crisis, with young people giving up on social life altogether due to their inability to find jobs. This situation gave rise to the phenomenon known as tangping.

중국 경제가 얼마나 심각한 상황인지 확인할 수 있는 사실 중 하나는 중국 극장가 매출이 전년 대비 반토막 났다는 것입니다. 이뿐만이 아닙니다. 특히 식음료 시장은 큰 타격을 받았습니다. 심지어 중국인들의 대중 음료라고 할 수 있는 밀크티 시장도 대폭 축소되었습니다. 이에 대해 한 네티즌은 밀크티 한 잔 값으로 더 많은 것을 살 수 있다는 사실을 점점 깨닫고 있다고 언급했습니다. 그는 이제는 10위안, 즉 약 10,000원짜리 밀크티조차 부담스럽다고 말했습니다. 또 다른 네티즌은 경제 불황 속에서 임금 삭감과 해고가 있는 상황에서 여전히 밀크티를 마실 여유가 있는 사람이 있을까라고 반문했습니다. 이것이 현실입니다. 상황이 이 정도니 일반 기업들이 얼마나 어려울지는 짐작할 수 있습니다. 뉴욕 타임스는 실제로 중국 서천에서 매장 간판 포스터를 제작하는 사업을 시작한 세리 양씨에 대해 보도했습니다.

While it was once a thriving business with 16 employees operating printers around the clock, the company is now struggling with business downturns, even after reducing its staff to six. This reality is not only affecting domestic companies in China but is also reflected in the withdrawal of foreign companies that had previously flocked to China. The French luxury group Louis Vuitton Moët Hennessy, or LVMH, announced last month that it would reduce its workforce following difficulties in the market. Additionally, the American IT company IBM is halting its R&D operations in China and laying off over 1,000 employees. Due to economic uncertainty, both domestic and foreign investors are moving their funds to safer places. Real estate prices continue to plummet, and the Chinese stock market is stagnating compared to major countries like the United States, Japan, and India. This year, China's securities investment has turned to net selling for the first time.

If you look at it, you can understand the current situation. The stocks of 180 Chinese companies were excluded from the stock market index at the beginning of this year, leading to a reduction in the share of Chinese companies in the global market. In this context, the Chinese authorities are doing their best to increase exports to achieve an economic growth rate of around 5%. In fact, Chinese exports are breaking records due to the global market for electric vehicles, as well as exports of batteries and home appliances. However, due to oversupply, profitability is declining, and the real estate sector is suffering significantly from the resulting downturn. There is also backlash from major trading partners. For these reasons, The New York Times has raised doubts about the Chinese government's ability to achieve its economic targets for this year, particularly the 5% growth rate. Despite the serious real estate downturn, the Chinese authorities are relying on large-scale infrastructure investments from the past.

The outlook is that there will be no economic stimulus measures, as it is evident that such efforts would be ineffective. Additionally, the so-called hidden debts of local governments, which are not captured in statistics, amount to about 7 trillion dollars, approximately 937 trillion won. Therefore, further borrowing could lead to an even greater burden. The problem is that there is no sign of recovery in the real estate market, which was a significant factor in the collapse of the Chinese economy. In this regard, JP Morgan's chief economist for China, Zhu Haobin, stated to the U.S. economic media CNBC that the collapse of China's housing market is not yet over, predicting that housing prices will not stabilize until at least 2025. China is actively refuting concerns from all sides. Jin Loting, director of the International Economic Research Institute at the Chinese Academy of Macroeconomic Research, said in April that Western media and politicians have been making a fuss over China's short-term economic downturn.

They argue that while they claim to dismiss the issues of the Chinese economy and its challenges, the reality is indeed very grim. The New York Times pointed out that just because the Chinese authorities deny it, the problems do not disappear. They highlighted the issue of youth unemployment as a prime example. The New York Times reported on a student named Yi, who majored in accounting at Nanchang, Jiangxi Province, and is set to graduate this summer. He passed the civil service exam last March, but he still does not have a job. The competition for all job openings reaches hundreds to one. Yi applied to 129 private companies in fields such as accounting, e-commerce, and social media. Although he passed interviews at some companies, the salaries offered were incredibly low. One company proposed a starting salary of $380 per month, approximately 510,000 won, which is not enough to sustain a living. Other companies also offered similar conditions.

휴일 없이 공휴일 근무를 해야 한다는 조건이 있었습니다. 메이크업 아티스트로 일해 달라는 요청도 있었지만, 실제로는 나이트클럽이 자리하고 있었습니다. 그녀는 동급생들 대부분이 실직 상태라고 하면서, 경제가 너무 안 좋다고 말했습니다. 이것이 중국의 현실입니다. 더 이상 무슨 설명이 필요하겠습니까? 와이타임스 국제정세 분석에 축복이었습니다. 감사합니다.

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