Social Mobility Fades in China as Economic Growth Slows

China's economic growth has slowed, leading to stagnant wages and disappearing jobs, eroding the promise of upward social mobility, especially for those from modest backgrounds. Despite more than 800 million people rising out of poverty since the 1980s, the middle class has expanded to around 400 million. However, for individuals like Boris Gao, whose parents were laid off from state-owned factories, the Chinese Dream of upward social mobility no longer feels achievable.

China's economic growth has slowed, leading to stagnant wages and disappearing jobs, which has eroded the promise of upward social mobility, particularly for those from modest backgrounds. Despite more than 800 million people rising out of poverty since the 1980s, the middle class has expanded to around 400 million. However, for individuals like Boris Gao, whose parents were laid off from state-owned factories, the Chinese Dream of upward social mobility no longer feels achievable.

The slowdown in China's economic growth, projected to decelerate to 2–3% GDP growth by 2030, is a significant shift from the rapid expansion of the past two decades [1]. This transition is not a temporary adjustment but a structural change, as President Xi Jinping has referred to as the "new normal." Key pillars of China's growth— investment, export, and consumption—are under pressure, with diminishing returns on investment, stable but not accelerating consumption, and geopolitical tensions impacting exports [1].

Demographic changes and rising household debt also pose challenges. By 2030, China will face a steep demographic cliff, with a shrinking workforce and a growing dependent population straining public services and reducing per capita productivity [1]. Simultaneously, the household debt-to-GDP ratio continues to rise, fueled by speculative real estate and slow wage growth, further eroding consumer confidence [1].

For global businesses, China's slower growth necessitates a shift from volume-driven models to margin- and efficiency-oriented approaches. Growth will be harder to come by, but not impossible, especially for firms that align with structural priorities like domestic consumption, green technologies, and productivity-enhancing innovation [1]. Multinational enterprises should recalibrate their strategies by reevaluating the size and sustainability of their China business case, focusing on profitable micro-segments, and localizing value chains to mitigate economic and political shocks [1].

The economic transition also has implications for social mobility. With stagnant wages and disappearing jobs, the promise of upward social mobility, especially for those from modest backgrounds, is at risk. The slowdown in economic growth and the challenges posed by demographic changes and household debt exacerbate these issues. The Chinese Dream of upward social mobility, which has been a driving force for many, may no longer feel achievable for individuals like Boris Gao.

In conclusion, China's economic transition presents both challenges and opportunities. For global businesses, it necessitates a strategic shift in approach. For individuals, it poses a significant threat to upward social mobility. The coming decade will challenge assumptions built on rapid expansion and demand a sharper strategic focus from all stakeholders.

References:
[1] https://arc-group.com/china-slowing-economic-growth/
[2] https://www.energytech.com/infrastructure/article/55298215/global-clean-energy-investment-report-china-no-1-america-2-and-emerging-nations-closing-fast