Chinese Communist Party Journal Admits Economic Vitality Has Weakened as Businesses Hold Back on Investment

China’s Communist Party journal Qiushi has acknowledged that economic vitality is weakening in some areas, saying businesses are increasingly choosing to wait rather than expand investment or hiring.

An article published on the journal’s website said expectations, confidence and choices among some “micro-level entities” were changing. Some companies, it said, were holding onto cash and avoiding new investment and recruitment. Some workers were also seeking stability and avoiding risks, including changing career paths or starting businesses.

The article, titled “Strengthening the Momentum of High-Quality Development by Stimulating Social Vitality,” opened with the July 30 meeting of the Communist Party’s Politburo, which called for stronger development momentum and greater social vitality. It said China was at a key stage in shifting from old growth drivers to new ones and changing its development model.

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The expectations, confidence and behavioral choices of some micro-level entities are changing, and vitality in some areas has weakened.

The journal described supply exceeding demand and weak domestic demand as persistent problems. It also cited downward pressure on consumption and investment growth, difficulties among companies in some industries, and increasing differences in business performance. The combination of domestic and international factors, it said, had slowed the movement of resources and increased pressure on economic growth.

The article added that public services in areas including health care, elderly care and childcare still fell short of public expectations. Higher living costs and risks for some families were also affecting their ability and willingness to consume, invest and pursue entrepreneurship.

The report followed an August Qiushi article examining the gap between macroeconomic data and people’s experiences. At the same time, a separate Qiushi commentary rejected claims that strict party governance and the anti-corruption campaign were harming economic and social development. The article said such views reflected a mistaken understanding of the relationship between party governance and economic growth.

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Businesses tend to hold onto cash and dare not expand investment or increase employment.