LEILA FADEL, HOST:
Leaders of China's Communist Party meet next week to discuss plans for the economy over the next five years. The meeting follows President Trump's threats to add another 100% tariff to Chinese imports and Beijing's increased restrictions on rare earth minerals. Here's reporter Sherisse Pham.
SHERISSE PHAM, BYLINE: China's economy is stuck in the doldrums. Youth unemployment is at a two-year high. Housing prices have been falling for more than four years, and many believe they're yet to hit bottom. And Chinese consumers, like 32-year-old Lu Yingcai and 36-year-old Liu Lu, who NPR recently met on the streets of Beijing, are tightening their belts.
LU YINGCAI: (Through interpreter) I'm actually traveling less and eating out less often. I'll still go out, but less frequently. And as for clothes, I might not buy as much unless it's absolutely necessary.
LIU LU: (Through interpreter) In the past, domestic demand was driven by real estate. But now the overall economic situation is poor and real estate is no longer able to drive demand. People may feel safer holding cash and are reluctant to make excessive investments.
PHAM: For decades, rising home prices was a real source of confidence for Chinese consumers. Then the country's real estate bubble collapsed in 2021, and suddenly, millions of Chinese found their biggest investments underwater.
JEREMY MARK: As soon as that was threatened, essentially everybody just stopped spending and worried about the future in a way that they hadn't had to do for a generation.
PHAM: That's Jeremy Mark, senior fellow with the Atlantic Council's GeoEconomics Center. Beijing has been trying to inject confidence into its economy, offering incentives for people to spend money on big purchases like cars, home appliances and smartphones. And for a while, it worked. But as soon as the stimulus money ran out, consumers stopped spending, according to Mark.
Last month, the government released key economic data measuring China's factory activity. For the sixth month in a row, the numbers indicate that industries are in contraction mode. The slowdown also hurts China's relationships with global trading partners at a time when Beijing is trying to bolster ties with them as Washington demands tariffs. Chinese factories are producing more goods than they can sell domestically these days, so they're exporting the excess at big discounts. Here's Mark again.
MARK: The whole world is going to feel the impact of a slower Chinese economy. Prices are falling very steeply in China at the factory gate.
PHAM: Now, normally, American consumers would benefit from that because they would be able to buy Chinese-made goods at cheaper prices. But Mark says...
MARK: With tariffs, in essence, prices from China could be going up much more.
PHAM: Meanwhile, other parts of the world, like Mexico, Turkey and Southeast Asia, are seeing a flood of Chinese goods, and this is already causing diplomatic problems for China. Beijing is now accused of dumping cheap goods and exporting overcapacity.
(SOUNDBITE OF ARCHIVED RECORDING)
JIN KEYU: China's going to have a real problem, not just with the U.S. but with the rest of the world.
PHAM: That's Jin Keyu, an economics professor at Hong Kong University of Science and Technology and occasional adviser to the Chinese government. She spoke at the World Economic Forum in Tianjin in June.
(SOUNDBITE OF ARCHIVED RECORDING)
JIN: Because it's no longer about just efficiency. It's about harmony. It's about giving other countries also...
TIAN WEI: Yeah.
JIN: ...An opportunity to be part of the global supply chain...
TIAN: Right.
JIN: ...In everything and every single sector. So China better raise its internal consumption and - to, you know, to harmonize these kind of relationships.
PHAM: So as Chinese leaders meet to discuss their next five-year plan later this month, economists will be looking for signs of a policy shift because, as Jin put it, China is never going to become a rich country unless it becomes a big consumer country.
For NPR News, I'm Sherisse Pham in Hong Kong.
(SOUNDBITE OF MARISA ANDERSON AND WILLIAM TYLER'S "AT THE EDGE OF THE WORLD") Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.