As the 75th anniversary of the founding of the People’s Republic approached, a new phrase emerged to capture the prevailing mood: “the garbage time of history.” This term likens the current state of the nation to the final moments of a basketball game where one team is trailing by a large margin, rendering their efforts to win seemingly futile. Many in China feel their country is caught in a similarly dismal phase, devoid of hope for a turnaround.
This pessimism starkly contrasts with the optimistic outlook that prevailed just five years ago during the last major National Day celebrations in 2019. At that time, economists were actively speculating about when China might surpass the United States to become the world’s largest economy. Such discussions have largely faded, replaced by concerns about how Beijing can avoid a repeat of Japan’s “lost decade” of economic stagnation following the collapse of its housing bubble in the 1990s.
In response to a series of grim economic indicators, Chinese leader Xi Jinping recently endorsed a much-needed stimulus package aimed at restoring confidence in the nation’s economy. The central bank announced various measures to combat falling prices, including enabling commercial banks to lend more and reducing borrowing costs for households and businesses.
Following this, officials unveiled plans for cash handouts to disadvantaged citizens and pledged subsidies for recent graduates facing unemployment challenges. On Thursday, the ruling Communist Party’s 24-member Politburo acknowledged the emergence of “new situations and problems” in the economy and called for urgent action, committing to boost fiscal spending, stabilize the property market, and improve employment opportunities for fresh graduates and migrant workers.
Xu Tianchen, a senior economist at the Economist Intelligence Unit, noted that the simultaneous rollout of these measures highlights the urgency for policymakers to support the economy.
The stimulus efforts provided a much-needed boost to China’s struggling stock market just ahead of the week-long national holiday beginning on Tuesday. China’s blue-chip stocks surged more than 15% last week, marking the largest single-week gain in nearly 16 years. Hong Kong’s Hang Seng Index experienced a 13% increase, its best week since 1998, according to Reuters.
The market frenzy continued on Monday, with total turnover on the Shanghai and Shenzhen exchanges surpassing 1.8 trillion yuan ($228 billion), a record high. This surge occurred despite another contraction in the official purchasing managers’ index (PMI) for factory activity in September, indicating ongoing economic challenges.