One reason consumption remains weak is the prolonged downturn in the property market.
Real estate once accounted for as much as a quarter of China’s economic activity when related industries are included.
But the industry has been in crisis for several years after a debt crackdown on developers triggered a wave of defaults and stalled construction projects.
Home prices have fallen sharply in many cities since 2021, eroding household wealth and confidence.
For decades, property served not only as housing but also as the main store of wealth for Chinese families.
When prices were rising, households felt richer and more willing to spend.
The real estate boom also generated vast revenues for local governments through land sales, helping finance infrastructure and public services.
With property prices now stagnant or falling, that wealth effect has reversed.
“China’s consumption challenge is largely about replacing the massive housing-investment demand engine,” DiPippo said.
The downturn has also hit employment in construction and related industries, weighing on incomes and consumer confidence more broadly.