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 – Statistics Canada says real gross domestic product grew 0.2 per cent in July, following essentially no change in June, helped by strength in the retail trade sector.
The agency says the growth came as services-producing industries grew 0.2 per cent for the month.
The retail trade sector was the largest contributor to overall growth in July as it gained one per cent, helped by the motor vehicles and parts dealers subsector which gained 2.8 per cent.
The public sector aggregate, which includes the educational services, health care and social assistance, and public administration sectors, gained 0.3 per cent, while the finance and insurance sector rose 0.5 per cent.
Meanwhile, goods-producing industries gained 0.1 per cent in July as the utilities sector rose 1.3 per cent and the manufacturing sector grew 0.3 per cent.
Statistics Canada’s early estimate for August suggests real GDP for the month was essentially unchanged, as increases in oil and gas extraction and the public sector were offset by decreases in manufacturing and transportation and warehousing.
This report by The Canadian Press was first published Sept. 27, 2024.
TORONTO – Canada’s main stock index closed above 24,000 for the first time Thursday as strength in base metals and other sectors outweighed losses in energy, while U.S. markets also rose and the S&P 500 notched another record as well.
“Another day, another record,” said Angelo Kourkafas, senior investment strategist at Edward Jones.
“The path of least resistance continues to be higher.”
The S&P/TSX composite index closed up 127.95 points at 24,033.83.
In New York, the Dow Jones industrial average was up 260.36 points at 42,175.11. The S&P 500 index was up 23.11 points at 5,745.37, while the Nasdaq composite was up 108.09 points at 18,190.29.
Markets continue to be optimistic about an economic soft landing, said Kourkafas, after the U.S. Federal Reserve last week announced an outsized cut to its key interest rate following months of speculation about when it would start easing policy.
Economic data Thursday added to the story that the U.S. economy remains resilient despite higher rates, said Kourkafas.
The U.S. economy grew at a three-per-cent annual rate in the second quarter, one report said, picking up from the first quarter of the year. Another report showed fewer U.S. workers applied for unemployment benefits last week.
The data shows “the economy remains on strong footing while the Fed is pivoting now in a decisive way towards an easier policy,” said Kourkafas.
The Fed’s decisive move gave investors more reason to believe that a soft landing is still the “base case scenario,” he said, “and likely reduces the downside risks for a recession by having the Fed moving too late or falling behind the curve.”
North of the border, the TSX usually gets a boost from Wall St. strength, said Kourkafas, but on Thursday the index also reflected some optimism of its own as the Bank of Canada has already cut rates three times to address weakening in the economy.
“The Bank of Canada likely now will be emboldened by the Fed,” he said.
“They didn’t want to move too far ahead of the Fed, and now that the Fed moved in a bigger-than-expected way, that provides more room for the Bank of Canada to cut as aggressively as needed to support the economy, given that inflation is within the target range.”
The TSX has also been benefiting from strength in materials after China’s central bank announced several measures meant to support the company’s economy, said Kourkafas.
However, energy stocks dragged on the Canadian index as oil prices fell Thursday following a report that Saudi Arabia was preparing to abandon its unofficial US$100-per-barrel price target for crude as it prepares to increase its output.
The Canadian dollar traded for 74.22 cents US compared with 74.28 cents US on Wednesday.
The November crude oil contract was down US$2.02 at US$67.67 per barrel and the November natural gas contract was down seven cents at US$2.75 per mmBTU.
The December gold contract was up US$10.20 at US$2,694.90 an ounce and the December copper contract was up 15 cents at US$4.64 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 26, 2024.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in the base metal sector, while U.S. stock markets were also higher.
The S&P/TSX composite index was 143.00 points at 24,048.88.
In New York, the Dow Jones industrial average was up 174.22 points at 42,088.97. The S&P 500 index was up 10.23 points at 5,732.49, while the Nasdaq composite was up 30.02 points at 18,112.23.
The Canadian dollar traded for 74.23 cents US compared with 74.28 cents US on Wednesday.
The November crude oil contract was down US$1.68 at US$68.01 per barrel and the November natural gas contract was down six cents at US$2.75 per mmBTU.
The December gold contract was up US$4.40 at US$2,689.10 an ounce and the December copper contract was up 13 cents at US$4.62 a pound.
This report by The Canadian Press was first published Sept. 26, 2024.
