For much of the past four decades, modern China has been synonymous with rapid transformation. Towering skylines, bustling factories and the rise of a confident middle class seemed to chart the course of the world’s second-largest economy. Yet behind the impressive statistics and official optimism, another story is quietly taking shape—one that focuses on China’s youth (青年, qingnian). Long celebrated as the driving force of national rejuvenation and urged by President Xi Jinping to contribute to the “Chinese Dream”, this generation now finds itself confronting challenges that call into question the durability of China’s economic miracle.

Prominent economist Gao Shanwen made headlines at an investor conference after describing China’s young people as “lifeless”, remarks later scrubbed from the internet by censors. “China is now full of vibrant old people, lifeless young people and middle-aged people in despair,” Gao said. “Young people are tightening their belts and eating noodles with the lights off.”

Across cities from Beijing to Chengdu, the country’s young generation is facing a stark reality: declining purchasing power, uncertain employment prospects and an economic environment where the government increasingly relies on subsidies to stimulate consumption. For many young Chinese, the promise of prosperity that once accompanied education and hard work now feels increasingly distant.

In recent years, Beijing has rolled out consumer subsidy programmes to encourage people to replace old household appliances, vehicles and digital devices. These programmes, which began in 2024, expanded significantly in 2025 and 2026 as part of a nationwide effort to revive weak demand. The government has allocated tens of billions of yuan in subsidies through special treasury bonds to fund these initiatives. In 2026 alone, China earmarked about 62.5 billion yuan (nearly $9 billion) for consumer trade-in subsidies to boost spending on appliances, electronics and other goods.

Under these schemes, consumers can receive rebates on a wide range of products. Major home appliances such as refrigerators, televisions and air conditioners qualify for subsidies of up to 15 per cent of the purchase price, while smartphones, tablets and wearable devices have been added to the programme with rebates capped at around 500 yuan per item. On paper, such policies appear generous. In practice, they reveal a deeper challenge: the purchasing power of ordinary households—especially the young—is weakening.

For a generation that once drove China’s consumption boom, buying even moderately priced appliances without government assistance has become increasingly difficult. Subsidies are no longer just incentives; they are becoming a structural tool to prop up fragile demand.

The Struggles Begin with Unemployment

Youth unemployment has quietly emerged as one of China’s most sensitive economic indicators. While overall urban unemployment remains stable at about 5 per cent, joblessness among young people is far higher. World Bank estimates put youth unemployment at about 17.7 per cent in 2025, reflecting slower job creation and a surge of university graduates entering the labour market. Official data released in 2025 showed unemployment among those aged 16–24 rising to 16.9 per cent.

Social media amplified the issue when a Ph.D. graduate revealed he had turned to food delivery work, while a gas company announced it was hiring graduates as meter readers.

Each year, millions of new graduates join the job market, intensifying competition. In 2026 alone, China expects more than 12 million university graduates, prompting policymakers to look to new sectors—such as artificial intelligence—for job creation. Yet many graduates end up in temporary or low-paying jobs unrelated to their studies. Others rely on family support or delay major life decisions such as marriage, home ownership or starting a family.

Fragile Demand and Slowing Growth

The ripple effects of this uncertainty are visible across the consumer economy. Domestic demand remains soft despite stimulus efforts. Retail sales growth spikes during subsidy campaigns, but economists warn it is unsustainable, driven by government incentives rather than genuine consumer confidence.

OECD projections show China’s growth slowing from about 5 per cent in 2025 to roughly 4.4 per cent in 2026, constrained by cautious household spending and high savings rates.

The property sector—once the backbone of household wealth—has also weakened. Falling housing prices and reduced investment have eroded household balance sheets, further discouraging spending. At the same time, questions have been raised about China’s official growth rate figures. Commentators note that the numbers are “systematically inflated” due to calculation methods, though they argue it is unlikely the central government manipulates the data directly.

“If my speculation is correct, I think it might be more reasonable to expect a growth rate between 3 and 4 per cent in the years to come, for the next three to five years,” Gao said. “But we know, and I think, the official number will always be around 5 per cent.”

 A Generational Mood Shift

The psychological impact of these economic pressures is also becoming visible. Across Chinese social media platforms, discussions among young people increasingly revolve around financial anxiety, career uncertainty and a sense that the traditional path to success is narrowing. Popular expressions such as “lying flat” (躺平, tang ping) and “involution” (内卷, neijuan) have become widely used among young netizens to describe withdrawal from intense competition and frustration with limited opportunities.

In May 2021, a 30-year-old netizen published a post titled “Lying Flat Is Justice” (躺平即是正义), sharing lessons from two years of joblessness. The post urged young workers and professionals, including middle-class youth, to avoid work and consumption and live with minimum expenses and desires. These terms reflect more than internet slang; they reveal a generational mood shaped by economic pressure and shifting expectations.

Despite these concerns, official messaging continues to emphasise resilience and long-term stability. Government plans highlight technological innovation, advanced manufacturing, artificial intelligence and infrastructure investment as pillars of China’s future growth. Yet for many young citizens, such narratives offer little comfort. What matters more is the ability to secure stable jobs, afford basic goods without subsidies and build a sustainable future.

The Irony of Shrinking Confidence

The irony is striking. China once cultivated a generation confident in its economic rise—eager to spend, invest and embrace modernisation. Today, that same generation navigates an environment where caution has replaced optimism. Subsidised refrigerators and discounted electronics may lift short-term sales, but they cannot restore lost purchasing power.

If current trends persist, China’s greatest challenge may not be factories or exports, but something more fundamental: a generation of young people whose wallets—and confidence in the future—are steadily shrinking. In a country where youth once symbolised growth, that reversal carries consequences well beyond the checkout counter.

Against this backdrop, the Party-state’s prescriptions—wrapped in the rhetoric of “positive energy” (正能量)—have drawn a decidedly negative reaction from the very generation they were meant to inspire.

© Eurasia Review