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Jane Cai

After the mainland Chinese stock market fell to a five-year low in February, Gu Wenyi dumped all her shares, vowing “never again”.
The 41-year-old had lost around 80 per cent of the 2 million yuan (US$283,000) she invested over a decade.
This week she was among the hundreds of millions of Chinese rushing back to the market on a wave of optimism after the government announced new measures to revive the economy.
“I think the top leadership is serious this time,” said Gu, a homemaker in Shanghai whose husband is a company executive. “As a stock market veteran, I’m cautiously optimistic – I’m sure we’ll have a bull market but it’s uncertain how long it will last.”
Mainland Chinese bourses saw record highs in trading volume on Tuesday when they reopened following the week-long National Day holiday. It was prompted by a slew of economic stimulus measures that have supercharged the confidence of middle-class investors, at least in the short term. But many remain cautious about the country’s long-term economic prospects.


The mainland stock market has been one of the world’s worst performers since 2021, hit by a shaky post-pandemic economic recovery and as Beijing’s focus was on other issues like national security and technology amid tensions with Washington and its allies.
The rallying cry came at the end of last month during a Politburo meeting, with a call to support the private sector, stabilise the property sector, buoy confidence in the capital market and expand fiscal support.
That followed policy moves including cuts to the benchmark interest and mortgage rates, a plan to prioritise job creation, and a pledge to introduce “powerful and effective” measures to boost the capital market.
The announcements have continued this week, with the National Development and Reform Commission on Tuesday saying it would front-load 100 billion yuan (US$14.1 billion) from the 2025 budget to finance infrastructure construction projects. The NDRC did not give further details, but analysts say stimulus packages in the trillions of yuan could be in the pipeline later this year and next year.
China’s economic growth has continued to lose steam this year, dragged down by the property market downturn, lacklustre domestic demand and negative investor sentiment.

Gu was hopeful about the policy changes. “It shows the top leadership cares about the economy and capital market – it gives us hope,” she said. “After all, there’s no better investment option for middle-class people like me.”
The ruling Communist Party wants to see more Chinese join the middle class. At the third plenum in July, a key conclave setting the economic blueprint for the next five to 10 years, party elites pledged to “steadily expand the middle-income group”.
The middle-income group – defined by the National Bureau of Statistics as a three-person household earning between 100,000 yuan and 500,000 yuan a year – currently accounts for about one-third of China’s 1.4 billion population.
In comparison, the middle class makes up about 50 per cent of the population in the United States, and in many developed countries in Europe more than 70 per cent of the population is middle class.
The middle class is widely regarded as an important parameter of a country’s economic dynamics and a predictor of economic and social prosperity. China’s middle class has even transformed the world economy by influencing demand for goods and services in global markets in better times before the pandemic.
But the government’s tough zero-Covid restrictions have taken a heavy toll. Many businesses collapsed, and the price of property – which accounts for about two-thirds of middle-income assets – has plunged in the past few years. Anxiety over issues like finances and investment, career development and a higher retirement age has weighed heavily on the middle class, forcing many people to reduce their spending.


For Gu, the stock market rally is a chance to improve her family’s finances. “The good times are behind us now as China is locked in this rivalry with the US,” she said. “So I’ll take every opportunity to make more money for the rainy days in the future.”
But the stock market is too volatile for Zhang Shengying, a 38-year-old programmer in Beijing who describes himself as “risk averse”.
He had considered selling one of his two flats after the Beijing government made it easier for people to buy property by lowering interest rates on mortgages and reducing down payments, following similar moves in other big cities including Shanghai, Guangzhou and Shenzhen.
Buying interest picked up over the week-long holiday from October 1. New-home transactions in 22 Chinese cities rose 26 per cent from a year earlier while existing home sales were up by 161 per cent, according to China Real Estate Information Corporation.
Zhang’s flat is in suburban Beijing, where prices have dropped by one-third from a 2017 high. He said it was still valued at 60 per cent more than 13 years ago, when his parents bought it for him, but he could have had the same return on investment from a term deposit.
“Market sentiment is better than months ago – I thought it might be a good time to sell,” Zhang said. “But I don’t know where I’d invest the money from the sale so I decided to stay put.”
Zhang lives with his family in the flat and rents out the second one.
“I could be laid off at any time. I don’t want to put more money into property, so selling one and buying a bigger, more expensive home is out of the question,” he said.
“These policies may work for the short term, but I’m not confident about the long term as China will have fewer people in the future.”


China’s population is shrinking and ageing, and it could be heading towards the largest decline seen in any country. A UN report in July forecast a 50 per cent chance that China could lose more than half of its current population by 2100. The birth rate is at a record low, there are fewer women of childbearing age, and people are putting off getting married, with more choosing not to have children at all – despite government efforts to encourage young people to start families.
Beijing is also trying to boost consumption. On Tuesday, NDRC director Zheng Shanjie emphasised the need to increase consumption, especially among lower-income and middle-class groups, as well as the need to improve aged care and childcare services, but no specific measures were announced.
In Suzhou, Jiangsu province, 34-year-old Qian Yihang, who runs a travel agency, said he had been planning to take up an incentive to trade in his petrol guzzler for an electric vehicle.
China last month said the subsidy would go up to 20,000 yuan per vehicle – nearly double the subsidy announced in April.
But Qian decided to keep his car after his father had a stroke, leaving him as the only breadwinner in a family of six – including a new baby.
“The stimulus policies are what we need, but they seem to be piecemeal and inadequate,” Qian said.
“With a sick parent and two children to raise, I feel so stressed. I hope there’ll be some significant help – such as government cash handouts and improvements in social welfare, so that we can regain confidence in the economy in the long run.”


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Hundreds of millions of Chinese rushed to buy stocks this week. Photo: Xinhua

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China’s National Development and Reform Commission announced two “100 billion yuan (US$14.2 billion)” investment plans on Tuesday. Photo: AP

National Development and Reform Commission chairman Zheng Shanjie. Photo: EPA-EFE

National Development and Reform Commission (NDRC) press conference on Tuesday in Beijing. Photo: EPA-EFE

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Tourists fill a street in Hengyang, Hunan province on October 1. China saw a substantial bump in tourism revenue over the “golden week” holiday as mainland consumers spent more generously. Photo: Xinhua

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China

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As a raft of stimulus measures boost confidence, many remain cautious about the nation’s long-term economic prospects


As a raft of stimulus measures boost confidence, many remain cautious about the nation’s long-term economic prospects.


China’s third plenum

China stock market

China’s middle class is riding a wave of optimism for now, but can it last?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}As a raft of stimulus measures boost confidence, many remain cautious about the nation’s long-term economic prospects

As a raft of stimulus measures boost confidence, many remain cautious about the nation’s long-term economic prospects