For many years, the most secure way to grow wealth and ensure future financial stability for the average Chinese family was to invest most of their money into the property market and put the rest in the stock market.
Those investments are no longer effective, especially since Covid-lockdowns hit China’s economy hard.
Recent data in China shows that property sales in April plummeted 46.6 percent from a year earlier. It was the most significant decline since August 2006 and a further drop from the 26.17 percent fall in March.
The regime’s incentive to push sluggish property demand by cutting interest rates for mortgage loans for some home buyers did not work.
It’s not just real estate. China’s stock market also faces the same downturn as economic data does not show many positive signs.
China’s major stock indexes both fell this year. The Shanghai Composite index has decreased by nearly 15 percent, while the Shenzhen Composite Index has lost almost 24 percent.
Bloomberg cited Wei He, an economist at Gavekal Research in Beijing, saying that the golden time of putting money in those types of investments and letting wealth grow is over.
As traditional investments become unprofitable, finding alternative types of investment is a headache. So instead, more and more money is put into savings accounts, even as benchmark deposit rates are at record lows.
Some analysts predict China’s economy will grow by more than 4 percent this year. In contrast, Bloomberg economists predict it will grow by only 2 percent, well below the regime’s target of about 5.5 percent.
Clawde Yin, a 45-year-old Shanghai resident, told Bloomberg that he has no other investment options and has to wait and see.
Clawde Yin has invested nearly 90 percent of his savings wealth in real estate and the rest in stocks. Despite uncertainty in the real estate market, he says he won’t put more money into stocks for now. He believes both options are vulnerable to regime policy changes.