Business Daily · BBC World Service

China’s new economic reality

March 16, 2026·17 min·1 clip

China announces its lowest growth target since 1991, shifting focus from growth to stability.

Host Rahul Tandon opens by framing China's two sessions meeting as a pivotal moment, noting the country has unveiled a five-year plan centred on stability rather than growth. Prime Minister Li Chong announced a growth target of 4.5% to 5%, the lowest since 1991, which Tandon notes most major economies would envy but which represents a significant policy shift for China. The Chinese word 'Wending,' meaning stability, emerges as the defining concept of the episode. Han Lin, head of the Asia Group in Shanghai, illustrates the mood through street-level observations: a taxi driver skipping a holiday to earn more, near-empty restaurants using dragon dances to attract customers, and a growing cultural pride in frugality. Han Lin attributes much of this caution to the property crash, which has seen apartment values fall 30-40%, destroying what was for millions of families their primary retirement plan, social safety net, and source of social status. The episode then turns to youth unemployment, with official figures showing 16.5% of 16-to-24-year-olds — roughly 25 million people — out of work. This has given rise to the 'Tang Ping' or lying flat movement, illustrated through first-person testimonies from young Chinese women. One describes her salary collapsing from 10,000 yuan to 2,000 yuan per month during the pandemic, sending over 40 resumes and receiving only two interviews. Another describes returning home to live with her parents in Chengdu, finding comfort in simple pleasures while the job market remained closed to her. Shanghai entrepreneur Stanton, whose full name is withheld, offers a more optimistic view, arguing that China's scale still creates opportunities for niche businesses and that the government's sector-level industrial policy — flooding industries with capital, letting companies compete, and keeping the strongest — has proven effective. He cites EVs as a model and predicts AI and chips will be the next targets, arguing China's manufacturing supply chain will allow rapid commercialisation of new technologies. The president of Vellong Enterprises, a manufacturer operating across China, India, and Cambodia, argues that China's stability and predictability are now competitive advantages, contrasting Beijing's consistency with what he describes as the unpredictability of the Trump administration. He suggests companies that relocated manufacturing to Southeast Asia are reconsidering, finding China easier, faster, and more competitive. Economist David Li, who has advised the Chinese government, argues the most straightforward solution to sluggish growth is a significant expansion of central government debt, noting China's debt-to-GDP ratio of around 26% is far below Germany's 111% or the US's 120%. He also highlights that the Chinese central government holds 80-90% of GDP in state-owned enterprise assets, making it the world's wealthiest central government by that measure. Li sees signs in the two sessions announcements — increased subsidies for families, healthcare, and education — that the government is moving in this direction, albeit slowly, likening China's economy to an oil tanker that turns gradually but steadily. He acknowledges that geopolitical pressures, including US-China tensions and global conflicts, are distracting policymakers from long-term economic decisions. The episode closes with the question of whether China's policy turn will happen quickly enough to meet the needs of its 1.4 billion people.

As heard by us

A grounded Business Daily look at China's slowdown, from job-market strain to state-backed sectors and the search for stability.

China's new economic reality catches an economy trying to trade speed for stability. Rahul Tandon frames the slowdown through policy signals from Beijing, a harsher jobs market for young workers, and the view from Shanghai businesses still looking for niches that can scale.

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You want a clear read on why China is slowing and what the new policies mean.

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