Property sales have fallen. Small businesses are closing because of rising costs and weak sales. Civil servants are being paid less by local governments.
China's economy slowed in the last months of last year as government measures to limit real estate speculation hurt other sectors. Consumer spending was hurt by travel restrictions to contain the coronaviruses. A wave of layoffs has been set off by regulations on everything from internet businesses to after-school tutoring companies.
China's National Bureau of Statistics said Monday that economic output from October through December was only 4 percent higher than a year earlier. The growth in the third quarter was 4.9 percent.
The world's demand for consumer electronics, furniture and other home comforts has kept exports strong, preventing China's growth from stalling. The government said that China's economic output was 8.1 percent higher than in 2020. The growth was in the first half of last year.
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A port in eastern China. China's exports have remained strong.
The snapshot of China's economy, the main locomotive of global growth in the last few years, adds to expectations that the broader world economic outlook is beginning to dim. The Omicron variant of the coronaviruses is starting to spread in China, leading to more restrictions around the country and raising fears of renewed disruption of supply chains.
China's leaders have a dilemma with the slowing economy. The measures they have imposed to address income inequality and rein in companies are part of a long-term plan to protect the economy and national security. In a year of political importance, officials are wary of causing short-term economic instability.
The Winter Olympics in Beijing, China, will focus on the country's performance. China's leader is expected to claim a third five-year term in the fall.
Deng Xiaoping lifted the country out of its Maoist straitjacket four decades ago, and Mr. Xi could face some of the biggest economic challenges since.
Li Daokui, a prominent economist and Chinese government adviser, said in a speech last month that he was afraid that the operation and development of China's economy in the next several years may be difficult. It may be the most difficult period since our reform and opening up 40 years ago.
As costs for many raw materials have gone up, millions of private businesses have crumbled, most of them small and family owned.
Private companies make up three-fifths of the Chinese economy's output and four-fifths of urban employment.
A few years ago, a man named Kang Shiqing invested a lot of his savings to open a women's clothing store in a river town in southeastern China. The number of customers never recovered after the Pandemic hit.
In China, there has been a shift toward online shopping, which can be used to undercut stores by using less labor and operating from inexpensive warehouses. Mr. Kang was paying high rent for his store. He closed it in June.
He said that they can't survive.
The high cost of borrowing in China is a problem for small businesses.
Private companies face challenges in China. The central bank is trying to encourage the country's state-controlled commercial banks to lend more money to small businesses. The country's many struggling small businesses will be helped by further cuts in taxes and fees.
The building and fitting out of new homes has been a big part of China's economy. China has built the equivalent of 140 square feet of new housing for every urban resident in the past two decades thanks to heavy lending and speculation.
The sector fell apart this autumn. The government wants to limit speculation and deflate a bubble that made new homes more expensive for young families.
China Evergrande Group is the largest and most visible real estate developer in China that has run into financial difficulty recently. Kaisa Group, China Aoyuan Property Group and other developers have had difficulty making payments as bond investors become more wary of lending money to China's real estate sector.
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The New York Times has a story about an empty construction site for a China Evergrande residential project.
Real estate companies are trying to conserve cash. That has been a problem for the economy. The price of steel reinforcing bars for the concrete in apartment towers dropped by a quarter in October and November before stabilizing in December.
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What is Evergrande? The Evergrande Group is the world's most debt-saddled developer. It was founded in 1996 and has millions of apartments in hundreds of cities.
How much is it due? Hundreds of unfinished residential buildings and angry suppliers have shut down construction sites because Evergrande has more than $300 billion in financial obligations. The company asked employees to lend it money because it was so bad.
The company got into financial trouble. China's real estate market was free for decades. Beijing has begun taking measures to tame the sector. As it grew and expanded, Evergrande borrowed a lot and ended up with more debt than it could pay off.
How has the Chinese government dealt with the crisis? Beijing sat on the sidelines as Evergrande neared financial collapse. The company said in December that officials from state-backed institutions had joined a risk committee to help restructure the business.
Where are things now with Evergrande? The real estate giant made eleventh-hour payments on its bonds to avoid default. A major credit ratings firm declared Evergrande in default after it failed to meet a payment deadline. What is next for the company, a fire sale, or business as usual has not been decided.
The decline in home prices in smaller cities has hurt the value of people's assets, which in turn made them less willing to spend. apartment prices are not going up as much in Beijing and Shanghai.
There have been faint hints of renewed government support for the real estate sector in recent weeks, but no sign of a return to lavish lending by state-controlled banks.
Hu said that the financial distress of Evergrande is a sign that money will be pushed from real estate to the stock market. There can be no return to the past if the policies are loosened.
Local governments rely on land sales as a key source of revenue and have been hurt by the housing market downturn.
According to the International Monetary Fund, government land sales raise money for the country at an annual rate of 7 percent. In the last few months, developers have stopped buying land.
Civil servants have had their bonuses and benefits slashed by some local governments due to revenue shortfalls.
A civil servant in the capital of the province complained of a 25 percent cut in her pay on the internet. The fax requesting comment was not responded to by the municipal government. The city of Hegang in Heilongjiang Province decided not to hire any more low-level workers. The announcement was deleted from the website after it drew attention.
Fees on businesses have been raised by some governments.
In the first nine months of last year, the city collected less money in fines than it did from October through December. The city undermined a national effort to reduce the cost of doing business.
Exports are setting records. Families around the world have responded to being stuck at home during the Pandemic by spending less on services and more on consumer goods made in Chinese factories.
Sports cars and jewelry have been selling well, with some areas of consumer spending being robust.
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Cars and trucks for export are parked at the port inYantai, in China's eastern Shandong Province, earlier this month.
The Communist Party congress will cause the government to allow a severe economic downturn this year. The government is expected to loosen its restrictions on lending and spend more money.
The first half of the year will be difficult, said the deputy dean of the Shanghai Advanced Institute of Finance. The second half will see a rebound.
Li You was involved in research.
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