Over $180 billion pulled out of China’s stocks and bonds market since 2022. The shift is speeding up China’s apparent decoupling with the West and reducing China’s clout among global investors.
In August alone, about $12 billion in foreign investment flew out of China—a record-breaking amount—as the Chinese economy is reeling, a crisis in the real estate sector deepening, and tensions with the West on the rise.
While foreign investments are shifting away, China’s domestic economy isn’t looking good either. Its youth unemployment rate hit a record 21 percent in August. It got so severe that Chinese authorities stopped updating it for fear of damaging its reputation as a manufacturing hub.
For the Chinese Communist Party, clusters of educated and unemployed young people in big cities could become a challenge to its authority. And for years, Beijing has been relying on economic growth to boost its legitimacy.
Now, that method is losing its grip under a reeling economy.
Provincial governments in China are in trouble as well. Most of them have run out of money with the outstanding bill standing at over $5 trillion. Many regions are at risk of default.
The situation is also getting harder for China’s educated elites. The deepening crisis in the housing sector, cutthroat competition in education, and hefty fees for raising children are all making it harder for them to uphold their living standards.