Middle Class in Mainland China Increasingly Falling into Poverty; Business Owners Cry Out in Debt; Public Outrage at Stimulus Consumption Policies

The phenomenon of the middle class in mainland China falling into poverty overnight is becoming more common, and stories about it are continuously appearing on Chinese social media. (Screenshot from the internet)

[November 11, 2024] The economy in mainland China continues to deteriorate, with more middle-class families falling into poverty overnight. Many private business owners can no longer sustain their operations, leading to closures and mounting debt. The CCP has introduced numerous consumption stimulus policies, hoping to boost the economy through enhanced internal circulation. However, the public has criticized these policies, bluntly stating they have no money in their pockets.

Increasing Incidence of the Middle Class Falling into Poverty

Recently, a blogger in Beijing posted an article titled “Middle-aged People in Their 40s Falling into Poverty Overnight.” In the post, the blogger mentioned a couple in their neighborhood who both worked for major internet companies and purchased a house in 2019 for 5 million yuan at the peak of housing prices. Both are now unemployed and wish to sell the house to pay off the mortgage, but the selling price is just over 3 million yuan, resulting in a net loss of 2 million yuan. Another case involved a financial professional who once earned millions and lived in a villa. He was suddenly laid off, his full-time wife left him with the children, and he was left with a huge mortgage debt.

The blogger lamented, “I don’t know how many people have fallen into poverty overnight due to real estate and the stock market. But if this calamity is inevitable, how can one save themselves or stop the loss?”

A former executive of an education group in Beijing and online user known as "Harbor Mommy," who has since moved to Hong Kong with her children, shared the real-life experience of her friend, Ms. W. She explained that Ms. W had accumulated the so-called “three fatal middle-class burdens”—a mortgage of nearly 10 million yuan, a non-working wife, and two children attending international school.

“Harbor Mommy” said Ms. W cried to her, “I’m so devastated. My husband suddenly lost his job, and we can’t afford the international school fees for the kids. The three fatal middle-class burdens—it’s real.”

According to her, Ms. W was once a typical middle-class mom in a first-tier city with a master’s degree, married to a financial professional. Initially, both had decent salaries, and their family background was solid. They planned to send their daughter to an international school in the area, which cost 230,000 yuan annually. They envisioned that their child would complete elementary and middle school at the international school and continue undergraduate and master’s studies abroad from the second or third year of high school, with total expenses around 10 million yuan. Unexpectedly, when the child reached fourth grade, Ms. W’s husband lost his job, their business declined, their assets turned into bubbles, and they couldn’t even afford the annual school fee of over 200,000 yuan.

“Harbor Mommy” stated that there are now many moms like Ms. W who wish to provide better for their children, but the current environment demands consideration of education costs, competitiveness, college admission rates, and job prospects.

The so-called "three fatal middle-class burdens" leading to financial ruin were summarized earlier by mainland lawyer Zhang Yonghui: a mortgage of nearly 10 million yuan, a non-working spouse, and two children attending international school.

Additionally, there is a widely circulated concept of the "five burdens of poverty for the middle class," which includes impulsive investments in startups, depleting savings for home purchases, elite education for children, acting as guarantor for others, and blind investments.

Economic commentator Yang Guoying previously wrote that nearly 90% of middle-class families in mainland China are small business owners and entrepreneurs. Under the circumstances of “financial idling,” these middle-class families will fall into a “poverty crisis.”

Bankruptcy and Debt: Some Commit Suicide, Others Struggle to Continue

Mainland China’s economy has worsened after three years of pandemic lockdowns, leaving private enterprises without hope of economic recovery and resulting in more bankruptcies. The economy has been particularly challenging in 2024, with bankrupt business owners facing massive debts; some choose suicide, while others hope to start anew.

Momo, a female business owner born in 1989 in Henan, found herself 1.8 million yuan in debt after her business failed. On November 8, she said in a video, “Today, I received a message from a very respected older brother who said, ‘By the time you see this message, I might no longer be in this world.’ I used to run a restaurant, and he was a supplier. Due to the impact of the macro environment over the past few years, he accrued a huge debt himself, but I didn’t expect him to take this path.”

She continued, “I feel that human life is incredibly fragile. Being in debt is not truly terrifying; as long as we get back up, things will get better eventually. As long as we are alive and believe in ourselves, there will always be a chance for a turnaround.”

A bankrupt female business owner weeps as she shares that two close friends recently committed suicide due to being unable to cope with bankruptcy. (Video screenshot, Dajiyuan composite)

In another short video last month, she disclosed another death. She said that her 37-year-old close friend developed severe depression after a failed business and a divorce, and ultimately jumped from a building, choosing to end her life.

She revealed that she still holds an IOU from that friend, who borrowed 120,000 yuan two years ago for a business venture. “Now she’s gone, and I’m tearing up the IOU. The debt is cleared upon death. What remains is only sorrow and regret. Life only holds opportunities when we are alive. Once gone, everything is lost.”

A blogger named "Xiang Xiang Fighting Debt" shared a post stating that she was born in 1988, about to turn 37, and has a five-year-old child. This year, her company went bankrupt, her house was mortgaged, and she is facing a broken marriage, with direct debts amounting to 3.7 million yuan.

In her post, she wrote that she had gone from being wealthy to losing everything. Monthly rent and child support are difficult to cover, creditors block her door daily, and life has become so destitute that not even 1,000 yuan could be borrowed.

She recounted calling her half-brother after 1 a.m., seeking a place to stay for the night, only to be turned down. Her brother said over the phone that because of her issues, he and his wife were no longer speaking, and even 1,000 yuan could not be lent to her: “All the money is with your sister-in-law, and I don’t even have 100 yuan of pocket money now. It’s no use pushing me.”

A bankrupt mainland businesswoman, Xiang Xiang, mourned in tears that her company had gone under, her house was mortgaged, and her family was scattered. She cried that she was 3.7 million yuan in debt, and no friends or family would lend her money. (Screenshot from video)

Xiang Xiang noted that she had once supported her brother with 300,000 yuan when he couldn’t afford to buy a house. She cried, “In this society, you’ll realize that once you have no money, you are treated worse than a dog.”

A self-proclaimed “Sister Wang,” a bankrupt business owner, posted a video saying she is from Shandong, born in the 1970s, and at her peak owned dozens of restaurants and a logistics company. Since the pandemic, she has been left penniless and is now 57 million yuan in debt.

In the video, she reflected, “Thinking back on having a fortune worth hundreds of millions and now being buried in debt, the fall from paradise to hell over the past five years has felt like an eternity. I’ve realized that the greatest suffering in this world is being in debt.”

Sister Wang, after her company’s bankruptcy, looked back on her journey from being worth hundreds of millions to being burdened with debt—a descent from heaven to hell over the past five years, realizing that debt is the greatest suffering in life. (Screenshot from video)

In the video, she said that she has endured beatings, insults, and accusations from creditors, and no one can understand the suffering of these five long years. “Now, with half my life left, I wander alone in a foreign place, and I truly don’t know what to do. The city lights look bright, but my heart is filled with desolation, on the brink of collapse, with no idea where to go.”

“My body, battered and torn, whispers to me to keep going and be strong, to believe in myself.”

More and more business owners like Momo, Xiang Xiang, and Sister Wang are burdened with massive debts. It’s not just small private companies facing bankruptcy; many of the once-famous private business giants are also struggling. According to incomplete statistics, one-third of the 28 major private enterprises in mainland China disclosed by local media have gone bankrupt, collapsed, or been taken over, including the Tomorrow Group, HNA Group, Zhongzhi Group, Yongjin Group, Anbang Group, CEFC Group, Oceanwide Group, Delong Group, Yihua Group, among others. Additionally, a number of enterprises have encountered financial crises and operational difficulties, such as the Wanxiang Group, Baoneng Group, Funde Group, Zhongwang Group, and New Rise Group.

Public Outrage at Stimulus Consumption Policies

This year, the CCP has been worried that the economic crisis could undermine its ruling foundation, so it has introduced a series of consumption stimulus policies. However, these measures have proven ineffective, and the public has created various videos criticizing these policies.

Recently, an animated video circulated in WeChat circles. In the video, an old man angrily says, “Experts say going on trips can stimulate consumption. How? With my meager savings, I’d run out of money walking from the city to the suburbs, not even reaching the highway. Is that stimulating?”

“It’s hard to survive on 3,000 yuan a month. If you gave me 30,000 yuan a month, I’d let a mouse take some rice home if it came to my place. Is that stimulating enough for you?”

“Don’t I know how to spend money if I have it? Is there anything you can stimulate?”

“I’m part of a vulnerable group, not a stupid one. I can think of countless ways to spend money, but there’s almost no way to earn it. You keep talking about stimulating consumption, but why don’t you stimulate income? Do I need stimulation? No, I need money!”

Ye Yaoyuan, a professor of international studies at the University of St. Thomas, recently told the Epoch Times that the CCP’s current economic measures are merely attempts to cover up issues when real solutions are unavailable.

Shen Ming-shih, Director at Taiwan’s Institute for National Defense and Security Research, recently told the Epoch Times that the CCP has no effective means to save the economy. Measures to stimulate the stock market have instead left more people trapped, failing to address the real estate issue or improve local government finances. “These market-saving measures are not just like rocket launches but momentary fireworks—dazzling at first, but quickly descending into darkness. Both domestic and international views are pessimistic.”

Senior economic commentator Wang He recently wrote in an article, “Why Can’t the CCP Boost Consumption?” pointing out three main reasons why consumption is hard to stimulate: the proportion of disposable income for Chinese residents relative to GDP is too low; household debt levels are excessively high; and the wealth gap in China is enormous, with the vast majority being poor.

Editor in Charge: Zheng Haoyu