Commentary: The Disconnect Between China’s GDP and Consumer Sentiment

China’s current economic landscape exhibits stark contrasts between impressive macroeconomic indicators and widespread public pessimism. Despite GDP growth consistently exceeding 5% and household incomes rising in tandem, a sense of economic hardship pervades daily life. Key sectors such as biomedicine, integrated circuits, artificial intelligence, robotics, and new energy are expanding rapidly, tourism is booming, the trade surplus has surpassed $1 trillion (a global record), and the Shanghai and ChiNext stock indices have gained 17% and 50%, respectively. Nonetheless, 80% of individual investors are losing money, jobs are scarce, and businesses struggle, highlighting a disconnect between aggregate statistics and individual well-being[para. 1][para. 2].

This contradiction is not rooted in data manipulation, but in the limitations of what is measured. The National Bureau of Statistics tracks GDP—growth in the economy’s output—but not “Gross Domestic Wealth” (GDW), or the total value of national assets. While China generated 20 trillion yuan ($2.8 trillion) in new GDP over three years, the country simultaneously lost 200 trillion yuan ($28 trillion) in national wealth, especially due to a decline in real estate values. As a result, GDP’s function as a “Profit and Loss Statement” omits the wealth destruction felt at the individual level, where both asset values and available cash flow have shrunk. People’s subjective well-being now depends more on preserving accumulated wealth than on incremental income gains, but policymakers lack a GDW measure to track this[para. 3][para. 4][para. 5][para. 6].

China has transitioned from a “scarcity economy” focused on output growth to a “moderately prosperous” society where wealth preservation matters as much as creating new value. Ignoring the importance of fair asset valuation keeps policy stuck in a developing-country mindset. The loss in property values cannot be offset by three years of 5% GDP growth, and the social effects are profound. As in corporate finance, strong apparent “profits” cannot compensate for a weakening balance sheet and poor cash flow, and this is playing out at the national scale: economic flow remains positive, but net assets are declining[para. 7][para. 8][para. 9].

Even GDP growth is uneven: value-added output and profits accrue mostly to large, tech-driven firms, while the urban middle class and those connected to real estate are hard-hit. Supply and demand remain imbalanced, and young people shy away from homeownership despite lower prices and historic mortgage rates. Changing cultural norms have loosened the traditional link between property and status, and there is a generational disconnect: young graduates face difficult job markets, while retirees hold assets they cannot easily sell[para. 10][para. 11][para. 12][para. 13].

China’s exports continue to surge, creating a record trade surplus, but the sector has shifted from labor-intensive goods to capital-intensive high-tech products like integrated circuits and electric vehicles. This transition benefits large corporations but offers less direct employment or wealth to ordinary citizens than prior export booms[para. 14].

Achieving 5% GDP growth is remarkable for an economy of China’s size (contributing a third of global growth), particularly while the real estate sector drags on performance. Yet, the pivot to tech and automation—dubbed “China Smart Manufacturing”—means fewer jobs and wider inequality. The economy’s health is neither simply “good” nor “bad” but rather “extremely polarized”: land-based wealth has collapsed while tech wealth soars. Most citizens remain under pressure in the old economy, while only a minority benefit from the new era. For investors, the prevailing advice is to “hold gold in one hand and technology in the other.”[para. 15][para. 16][para. 17]