Chinese people adapt to economic challengesーNHK WORLD-JAPAN NEWS

Key Concepts

• China's Economic Slowdown (2025): Real GDP growth of 5.0%, but with decelerating quarterly growth.
• Restaurant Industry Crisis: Record closures due to economic factors and declining consumer spending.
• Real Estate Slump: Ongoing downturn impacting new construction and driving demand for older, smaller properties ("La Pocha").
• La Pocha Properties: Older, smaller apartments (typically 20+ years old, <60 sq meters) becoming increasingly popular among young buyers.
• Consumer Behavior Shift: Young people prioritizing affordability and convenience in housing choices.

Economic Performance and Challenges (2025)

China’s Gross Domestic Product (GDP) experienced a 5.0% year-on-year increase in real terms in 2025, successfully meeting the government’s established target. However, this overall growth masks a concerning trend: a slowdown in economic activity during the October-December period, registering a growth rate of 4.5%, a decrease from the preceding quarter. The primary drivers behind this deceleration are identified as weak personal consumption and the persistent downturn in the real estate sector. This suggests a potential weakening of internal demand despite the headline GDP figure.

The Restaurant Industry in Crisis

The economic slowdown is significantly impacting the restaurant industry. Reports indicate a record number of closures nationwide, exceeding 3 million establishments in the past year. This demonstrates a substantial contraction within the food and beverage sector. Zulu Luha, a kitchen equipment recycler, exemplifies this trend. His business model relies on purchasing and reselling equipment from failed restaurants, and he notes a rapidly decreasing number of businesses to source from – a decline of 8-9% annually.

A case study presented involves a hot pot restaurant in Beijing, which opened only seven months prior to closing. The restaurant incurred losses of approximately $290,000 before ceasing operations. Luha subsequently acquired the restaurant’s kitchen equipment and fixtures, illustrating the direct link between restaurant failures and his business. The specialized equipment, exemplified by that used for Peking duck preparation, represents a significant investment, further highlighting the financial strain on these businesses.

The Rise of "La Pocha" Properties

Concurrently with the real estate slump, a new trend is emerging in major Chinese cities: increased transactions involving “La Pocha” properties. These are defined as older apartments, generally around 20 years old or more, with a floor area of 60 square meters or less. This shift reflects a change in housing preferences driven by economic constraints.

Yang Yang, a resident of Guangzhou, provides a personal example. In 2024, she purchased a used condominium with a 30-year mortgage for approximately $65,000 and undertook renovations. Her unit, located on the eighth floor of a 25-year-old building without an elevator, spans only 20 square meters. Despite the lack of amenities, she considers it a practical choice, stating, “The mortgage would have been higher for a new condo, and I wouldn't be as satisfied as I am now. Life here is very convenient.” This highlights a willingness to compromise on size and convenience for affordability.

Data and Market Trends in Real Estate

Statistical data reinforces the trend towards older properties. In 2024, older properties accounted for roughly 80% of all real estate transactions in Beijing and Shanghai. Furthermore, the total floor space of newly sold homes in major cities has decreased by approximately 40% over the past five years. This data clearly demonstrates a significant shift in market demand away from new construction and towards pre-owned properties.

Expert Perspective and Underlying Factors

A real estate expert explains this phenomenon, stating, “When people want to buy a home but lack enough funds, they go for used ones. For many, the hurdles to buying a home have become even higher.” This underscores the financial barriers preventing many young people from entering the new housing market. The expert’s statement suggests that the affordability crisis is a primary driver of the “La Pocha” trend.

Conclusion

The Chinese economy, while still growing, faces significant challenges in 2025. The slowdown in personal consumption and the ongoing real estate slump are impacting key sectors like the restaurant industry and reshaping consumer behavior in the housing market. The rise of “La Pocha” properties represents a pragmatic response to affordability constraints, indicating a shift in priorities among young buyers. The uncertain economic outlook suggests that these impacts on daily life are likely to persist for the foreseeable future.