China’s economy is showing outward signs of resilience, driven by record exports and rapid advances in artificial intelligence and other high-tech industries, but for many citizens and small business owners, the lived reality is far more difficult, according to reporting by the Associated Press (AP).
Official data and headline indicators suggest the world’s second-largest economy remains on track to meet its 2025 growth target of around 5%. Exports have surged, high-tech manufacturing has expanded, and Beijing has avoided a renewed full-scale trade confrontation with Washington following a truce between President Donald Trump and Chinese leader Xi Jinping. Yet beneath these figures, weak consumer demand and a prolonged property slump continue to weigh heavily on confidence.
AP reports that while government-backed sectors such as electric vehicles and AI are thriving, small businesses dependent on household spending are struggling as consumers tighten their belts amid job and income uncertainty.
“Business is very tough right now,” said Beijing billiards hall owner Xiao Feng, speaking to AP. “Ordinary people don’t have money to spend.” Xiao said that after covering rent, labour and utilities, he is barely breaking even and has gone months without personal income.
A widening gap between data and daily life
Economists interviewed by AP say the contrast between headline growth figures and on-the-ground sentiment is becoming more pronounced. Some argue that China’s real growth rate may be slower than official numbers indicate, despite international institutions such as the International Monetary Fund recently revising their 2025 growth forecast for China upward to 5%.
Retail sales rose just 1.3% in November compared with a year earlier, sharply slower than October’s pace, while fixed-asset investment declined by 2.6% in the first 11 months of 2025. Household disposable income growth has also lagged pre-pandemic trends, with economists noting that gains previously driven by rising property values have largely disappeared.
“China’s economy is in the midst of a major transition,” Lynn Song, ING’s chief economist for Greater China, told AP, referring to Beijing’s effort to shift from property- and infrastructure-led growth to a model centred on consumption and high-value manufacturing. However, he noted that investment flowing into AI and technology has not translated into broad-based wealth gains for ordinary citizens.
Property downturn remains the key pressure point
At the heart of the confidence problem is property, which represents the bulk of household wealth in China. Housing prices have fallen by more than 20% in many areas since peaking in 2021, following a regulatory crackdown on excessive borrowing that triggered a deep real estate debt crisis.
According to official figures cited by AP, new home sales by value fell more than 11% in the first 11 months of 2025, while property investment dropped nearly 16%. For homeowners like Xiao, the impact has been personal and immediate. The apartment he bought in Beijing in 2019 has lost hundreds of thousands of dollars in value, curbing his willingness to spend on everything from cars to private tutoring for his child.
Similar stories are emerging across service sectors. A commercial property agent in Beijing told AP that his income has collapsed from millions of yuan annually during the boom years to a fraction of that today, as companies relocate or scale back. Tutors, hotel owners and other small operators report sharp declines in demand as families prioritise essentials.
Outlook: slower growth ahead
Most economists expect China’s growth to decelerate further in 2026 and beyond unless deeper reforms are introduced to boost household income and consumption. Persistent overcapacity in industries such as autos, steel and consumer goods continues to depress prices and profits, while China’s expanding trade surplus—estimated at over $1 trillion in 2025—is heightening the risk of renewed trade tensions.
Some analysts argue that a fundamental redistribution of income toward households is needed to restore confidence, but such changes remain politically sensitive.
For now, AP reports, caution dominates sentiment among ordinary Chinese. “I don’t see an immediate rebound,” said a small hotel owner in northern China, who feared repercussions for speaking openly. “If things don’t improve, I’ll shut down.”
The message from the ground is clear: while China’s macroeconomic indicators suggest resilience, the prolonged property slump and weak consumer confidence continue to shape a far more fragile economic reality.
