Behind Beijing’s Strong Economy: The Real Reality for Households, Companies and the Taxman

Beijing’s economic performance is not as strong as it appears on the surface, with households, companies and even taxman experiencing less optimistic conditions. Despite China’s first-quarter growth of 5.3%, which exceeded expectations and surpassed Beijing’s target of around 5%, the reality faced by different sectors paints a different picture. The central bank’s urban depositor survey reveals that only 9.5% of respondents saw good job prospects by the end of 2023.

Households in China have been saving more due to uncertainties, with an increase of 8.6 trillion yuan ($1.2 trillion) in savings during the first quarter. Some banks have stopped offering long-term fixed-income products to protect their margins, resulting in a downturn in the market evident in the CSI 2000 Index, which is down 20% for the year, particularly affecting small-cap companies sensitive to business cycles.

The government’s fiscal revenue decreased by 2.3% from a year ago as of February, indicating that while China’s GDP growth may be strong, there are underlying issues affecting various sectors of the economy. Overall, while China’s economy is showing signs of strength on paper, there are several challenges that must be addressed to ensure sustainable growth in the future.