Holding her newborn daughter, Lynne, 33, feels apprehensive about the future. Her elder son, though adorable, is already draining the family coffers and he hasn’t even started school yet. His private kindergarten in Beijing costs 80,000 yuan (US$11,ooo) a year. Extracurricular classes, including 10 hours a week of English, sports, painting and online tutorials, cost another 60,000 yuan (US$8,300). She already knows that his five-month-old sister won’t get the same resources.
“I don’t have the energy to jiwa again,” she says, using a Mandarin term for helicopter parenting. She longs for her home town of Xingtai, a small city in Hebei province, where school fees are a fraction of what they are in Beijing, and where life is “peaceful and relaxed and happy”.
“It’s really hard in Beijing,” she says.
Like tens of millions of other wealthy urbanites in China, Lynne has ridden the wave of an economic boom that has transformed China from a poor, largely rural country into the world’s second-largest economy.
When Lynne was born in 1990, nearly 70% of China’s population lived in extreme poverty, according to the World Bank. Now that share is virtually zero (although many people are still very poor).
When China joined the World Trade Organization in 2001, western pundits predicted that greater economic engagement with the west would lead to political liberalisation, while in China, leaders promised the opposite: as long as ordinary Chinese stayed out of politics, the state would deliver riches.
Both of those predictions have failed to materialise.
A Covid-battered economy – tainted by slowing demand and a deepening property crisis – coupled with an ageing population, an increasingly strained business environment and growing tensions with the west, have left many experts asking whether China’s unstoppable rise is already petering out.
The central bargain
Since Xi Jinping came to power in 2012, Beijing has clamped down on dissent at home and taken a bullish stance on the world stage. Now the central bargain between the state and middle class has shifted to an offer based on security rather than prosperity.
However, that’s not necessarily what China’s middle class – which has ballooned in the 21st century – signed up for.
Definitions of what constitutes the middle class vary, but according to the Pew Research Centre, the share of China’s population in the middle income group grew from 3.1% in 2000 to just over 50% in 2018. By the end of this decade, another 80 million people will join their ranks, predicts Boston Consulting Group.
But although living standards are improving for many people, social mobility is stalling. Children born in the bottom 20% of society in the 1980s are less likely than those born in the 1970s to move into the top 20% income group, according to a 2019 study. Amid growing inequality, climbing the social ladder is competitive and increasingly only an option for families that are already wealthy. A study, published in 2020, found that while sons of peasants had increased their access to higher education by 11 percentage points between 1945 and 1980 onwards, for sons of professionals the increase was 34 percentage points.
Xi is alert to these frustrations. In 2021, he started talking about the need for “common prosperity”, reviving a Mao-era phrase that was also invoked by Deng Xiaoping, the leader who oversaw China’s reform and opening up, who said that by letting “some people get rich first”, common prosperity would follow.
Xi’s common prosperity drive prompted major crackdowns on business and the ultra-rich. It also included measures to cool the competition among jiwa parents such as Lynne, by banning for-profit tutoring and setting limits on homework.
State media said that the policies would reduce the burden on students, but parents complain that they just shifted responsibility from schools to families. Exams remain ruthlessly competitive and the tutoring industry has merely been pushed underground. Last year, the government ministry of education closed down more than 450 tutoring firms that were continuing to offer lessons despite the ban. “I don’t think it’s good,” says Lynne, of the homework bans. “It’s more complicated now.”
The sudden end of a tutoring industry, worth an estimated $120bn, at the expense of millions of jobs for young graduates, is a microcosm of the challenges facing China’s leaders.
The middle class boom promised with it an urban lifestyle closer to that of young graduates in the metropolises of western Europe and the US. China’s educated younger generations are overqualified for factory jobs, once the bedrock of China’s economy, but have struggled to find meaningful work to take its place. In 2021 more than 70% of unemployed Chinese city-dwellers aged 16 to 24 had a degree.
Many educated elites are no longer confident that they or their children will be able to improve their lives in the way that their parents did. Instead, the government is offering a nationalist, security-based vision of stability, with the economy paying the price if necessary.
Goldman Sachs still predicts that China will overtake the US to become the world’s largest economy by 2035. But other economists think that China will never become number one, and that its economy will soon peak.
This is the first in a series of articles that will examine the challenges facing China’s government and its population – at a time of upheaval for the country’s economy.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
