When Things No Longer Inevitably Get Better: The Political Economy of Generational Change in China

When Things No Longer Inevitably Get Better: The Political Economy of Generational Change in China by Shaun Breslin November 2025 KEY TAKEAWAYS China faces a major, demographic shift. While precise forecasting is fraught with difficulty, there is a broad consensus that as the population falls, burdens on the working population will increase. While the biggest impacts might still be some way off, the first effects will be felt within the next decade. The government has already introduced legislation to try to offset some of the shorter-term consequences. This will have the biggest impact on those who are currently at the start of their working lives. The same generation of younger Chinese also faces more immediate challenges; not least finding the sort of jobs they want in the places they want to live. While previous generations have, for many years, more or less assumed that their lives would be better than their parents, this is no longer the case, creating an important legitimacy dilemma for the Chinese leadership. 1 EuroHub4Sino Policy Paper 2025/17 Generational Change Youth Unemployment Demographic Change Lying Flat Legitimacy Socio-Cultural Changes Keywords https://doi.org/10.31175/eh4s.bdd1 2 EuroHub4Sino Policy Paper 2025/17 Introduction There has been much talk over recent years about generational challenges to the Chinese economy, and whether China might get old before it gets rich. The main focus has been on the consequences of China’s demographic transformation with the 2020s already witnessing (albeit moderate) population decline. The UN calculates that by as soon as 2050, the overall population is likely to drop from a just over 1.4 billion (in 2022) to just over 1.3 billion. [1] Over the longer term, the decline is expected to be even more dramatic: This is not necessarily a bad thing. There is no simple and clear calculation of the relationship between population size and the environment, and losing x per cent of the population does not automatically result in an x per cent decrease in environmental problems; where people live, how they live, who they live with and the demographic distribution make predicting ecological consequences of population loss rather complicated. Nevertheless, as Xi Jinping himself has argued, population decline does bring a “developmental dividend” by “alleviating pressure on the environment and resources”. And a smaller economy might be a better economy too if it is characterised by quality rather than quantity. [3] China is also likely to record the largest population decline of any country through the end of the century (786 million people). By 2100, China is projected to have lost more than half of its current population and to have returned to a population size comparable to that recorded in the late 1950s. [2] 3 EuroHub4Sino Policy Paper 2025/17 But as Xi also noted in the same speech, population decline also raises many complications too. This is in part simply consequence of size, as a smaller population will result in “a shrinking labour force and weakened consumer and investment momentum”. However, age distribution is at least equally as important, and this smaller population will be an aging population too. Thirty per cent of the population (around 400 million people) is expected to be over 60 by as soon as 2035 - an increase from 20 per cent in just a decade - creating “great challenges to public services accessibility and the sustainability of social security system” [4] The proportion of the population that is not of working age (ie: too young or too old) is just under 50 per cent today. If China’s population decline hits the UN’s medium projection, it will be over 100 per cent by 2079. If it reaches the UN’s most extreme projection, then it will be over 150 per cent. [5] And that’s assuming a retirement age of 65, and the current plans are only to increase the retirement age for men from 60 to 63 and for women from 55 to 58 (by 2040). [6] Whatever the final number might be, it is very clear that there is going to be a lot of pressure on both the government and the working population to provide for the rest of the people. 2100 is still a long way off, even though it is closer in time to today than the founding of the People’s Republic of China in 1949. 2079 (when the working age population is expected to be in a minority) is still more than half a century distant, but means that some of those who are currently in primary school will have to carry some of the burden. Changes to the retirement age though – and related changes relating to paying pension contributions for longer – will affect some of those who are already in work, and all of those who are just about to join the job market. If, that is, they can do. Which brings us to arguably one of the biggest headaches that the CCP faces in trying to maintain its control over politics and society. Whilst obviously there are millions of individual exceptions, at the generalisable level, as new generations of Chinese became young adults, there was more or less an expectation that their livers would be better than their parents. And this was the case for many years; perhaps since the economic future began to look more promising in the early 1990s after a section of China’s expectations (or maybe hope) of more freedom and choice were dashed in 1989. It is impossible to quantify how far this expectation of generational improvement resulted in support for the party and the one party state. It seems reasonable to assume, though, that it gave at least some Chinese an incentive not to rock the boat and accept the status quo that seemed destined to provide ever greater personal improvements and a brighter future. This is no longer the case. Once again there will be millions of individual exceptions and talking at a generalisable level is always problematic. But for a significant number of young Chinese today, there is no longer that simple assumption that things are getting better and a good life lies ahead. And this means that at least part of the party’s previous means of building popular support and legitimacy may well be losing its efficacy. 4 EuroHub4Sino Policy Paper 2025/17 Sources of Concern Having to work longer than their parents and contribute more to their pensions might be one cause of concern. And who knows, as has been the case in a number of countries facing funding crises for social services, that retirement is very likely to move further into the future at some point. But there are other more real and present causes of concern for many young Chinese adults today. Indeed, in some ways it would be strange if there was an unquestioning expectation of good times ahead given the messages that have come from the top of the political system in recent years. There has long been a careful balance in official speeches and documents between acknowledging problems that need to be addressed on the one hand, and on the other hand reaffirming how effective the party is in successfully dealing with whatever obstacle that it has to overcome. But the warnings of rougher times ahead seem to have become louder in recent years as “the adverse impact of changes in the international environment increased, and some deep-seated structural problems that had been building up in the country for years came to a head.” [7] Presumably the intention is to emphasise the need for unity and support for the party as it faces and deals with these challenges on behalf of the people. And also to dampen expectations of what can be delivered in the long term after years of high growth; growth that was often achieved at the expense of exacerbating the “deep-seated structural problems”. But lowering expectations can be risky when it comes to maintaining popular support and legitimacy. It can have real world economic consequences too if a drop in confidence about the future results in a dip in the very same domestic demand that the leadership wants to increase in its search for an ever more resilient economic future. [8] And this is exactly what has already happened in China. Here, though, real economic changes must have had more of an impact than rhetoric, with declining property and real estate prices a key cause of this drop in consumer confidence and consumption. Avoiding or delaying purchasing property because of concerns about future employment – an issue we will return to in more detail shortly - is just one of a rather large number of causes of the above mentioned “real estate crisis”. [9] Yet despite the overall drop in prices, buying (or renting) property in those cities that most young Chinese want to work in – Beijing, Shanghai, Shenzhen, Guangdong, provincial capitals for example - remains very expensive, and look particularly expensive when compared to graduate starting salaries. [10] Whilst falling prices creates problems for one part of the population (and the economy as a whole), it is the residual high cost in desired locations that creates a different problem for those who are not already living where they want to live. For those graduates and other young Chinese who can afford property – typically with considerable family support – smaller than desired apartments and long commutes to work are not necessarily what they thought the future would bring (though long commutes from cheaper accommodation is not just a problem for the young). [11] And just to add one more potential concern into the equation, China has been calculated as the second most expensive 5 EuroHub4Sino Policy Paper 2025/17 place in the world to raise a child (after South Korea); on average 6.3 times the per capita GDP figure, and even more expensive in the cities compared to the countryside. [12] This is not the better life that was once imagined. The accommodation issue points to a key issue; the mismatch between expectations and opportunities. And this disparity is perhaps most clear when it comes to graduate and youth unemployment. As is the case in other countries, youth unemployment rates (in China’s case, 16-24 year olds not in education) fluctuate from month to month as young people tend to enter the job market in lumps (as they graduate from school or university) but leave it in strands as they gradually find employment over subsequent months. There have also been periods when the state paused issuing statistics and change the baseline of comparison making it tricky to identify longer term trends. That said, youth unemployment figures of 14.9 per cent in December 2023 and 15.7 per cent a year later give a rough idea of the scale of the problem, even though it is widely thought that the real figure including all recent graduates is even higher. [13] It is likely that the figure for this age group is close to four times the overall national unemployment rate (roughly five per cent); though without statistical evidence, some informally suggest that the graduate unemployment rate a year after graduation could be as high as a third. What we do know for sure is that thanks to the demographic changes noted above and educational developments in China, a record number of over 12 million students graduated from University in 2025 joining an already crowded job market. The high unemployment rate is not simply because there are no jobs. There are. But the jobs that are most widely available are often in sectors that graduates don’t want to work in and/ or think are not degree level jobs (for example, in sales or manufacturing). They are also often not in the places that they want to live and work, or offering the pay and conditions that are deemed appropriate for graduate entry positions. [14] The changing demographic balance combined with a shift in the nature of economic activity (and the rate of growth) have changed what is available and where. But the key is that expectations have been raised that are now often very hard to meet. Shared Challenges, Distinct Chinese Contexts China is not the only country in the world where the opportunities for (and expectations of) social advances have stagnated (or worse). Or where significant proportions of young people are disaffected and look to the future with concern rather than hope and anticipation. However, while there might be some similarities with events and experiences elsewhere, it would be a mistake to simply assume equivalence across cases. This is in part because it is important to identify different causes, as this will influence both the potential manifestation of disaffection and also potential responses to it too. Is immigration the issue in China that it is in some other cases for example? And also to identify different degrees of causality where there A reality-expectations gap? are common bases for concern; is the cost of accommodation relative to incomes in the cities that people want to live in more of an issue in China than it is elsewhere? More important, though, is the nature of the Chinese political system. It should go without saying that what you can and cannot do in a one-party state is very different from what is permissible in a democracy. And yet seems that it does needs to be said and re-stated every now and again. In democracies, parties often win elections by emphasising the failures of their predecessors. And the losing predecessors can regroup, lick their wounds, come up with new strategies and ideas, and try to win power again in the future. The latter is certainly not an option in the one-party state. 6 EuroHub4Sino Policy Paper 2025/17 Neither technically is the former. That said, new leaders have in the past tried to cement their position by pointing to their search for the solution to previous failings, even if those failings were brought about by the very same CCP that is now offering solutions. Whatever you think about the nature of CCP rule, it really is remarkable that the same party that unleashed the chaos of the Cultural Revolution is not just still in power today, but to a considerable extent cemented its power in the 1980s and 1990s by rejecting and overturning much of what it had done and stood for in the 1960s and 1970s. The way that Xi Jinping argued the need for a “New Era” of Chinese politics did not represent as much of a U-turn as the one that Deng and other leaders made after Mao. Yet it did entail an implicit criticism of the policies of his predecessors who had acted too slowly and too late to change the economic model and the nature of economic growth. These failings had created problems that this new and latest incarnation of the CCP under Xi would now put right. So both the post-Mao and postHu Jintao leadership – to different degrees and in different ways – in part tried to model themselves as something new whilst at the same time emphasising continuity and the party’s long-term efforts and successes since its formation in 1921. Acknowledging problems in a one-party state entails a tricky balance between trying to convince everybody that the party has the tools to solve them on the one hand, whilst not shining too much light on the fact that it is the very same party that has caused them (or not already dealt with them) on the other hand. Moreover, while a new leader might be able to point to themselves as the solution to previous failings, that becomes much harder to do (and perhaps even impossible) the longer that leader has been in power. Continuity and Change in a One-Party State Moving from the rulers to the ruled, the corollary of this one-party state effect is that the disaffected in democracies have a number of options open to them. They can legally take to the streets to demonstrate (even if some democracies have tried to restrict this freedom of expression). They can air their grievances online, or through more traditional print and Political participation (or the lack of it) 7 EuroHub4Sino Policy Paper 2025/17 broadcast medias. They can vote for or join or even establish political organizations and/or parties that actively confront the ruling powers and/or try to replace them. Political groups and parties that want to challenge the CCP (let alone compete with it for power) are certainly not acceptable in the PRC, removing one of the key options of action available in other systems. [15] And notwithstanding the invention of China’s online activists in finding ways of bypassing censorship, [16] publicly airing grievances is both difficult and dangerous; particularly if those grievances are broad based and/or systemic in nature rather than focussing on individual specific issues. The same is true when it comes to protests and demonstrations. While we might not know the exact number of what tend to be called “mass incidents” in China, just following what is reported in the Chinese press tells us that there are lots of them. These tend to be responses to specific local issues with labour disputes the main driver followed by problems relating to real estate and housing (including forced evictions, demolitions and land usage). There is evidence that the number of protests and demonstrations has increased as economic growth has slowed, with “ a particularly sharp rise in homeowners protesting against the unscrupulous practices of property management companies”. [17] They are often – perhaps even typically - linked to concerns that local authorities are either not dealing with them properly, and/or that local officials are in benefitting from the wrongdoing. [18] Given the most common causes of mass action, they might be thought of as reflecting a degree of dissatisfaction with a political system that is failing to protect the people it is meant to serve. In general, though, this is not the case. Instead, Chinese protests and protestors overwhelmingly focus on bad people at the local level doing things badly rather than on the systemic failings of the political system (that keeps allowing bad things to happen). There are exceptions. While the anti-lockdown protests during the Covid pandemic might not have been wholly national in nature, they certainly took place in a number of places across the country at the same time (more or less). In some places, they were spurred by specific issues/failings; the Urumqi fire for example. [19] But they all had broader common concerns at their heart and individually and collectively demonstrated “declining trust in the central government” rather than ineffective or corrupt local officials. [20] So there are activist options, but they are risky options for those who get involved. And the risk increases the more widespread, sustained and system-facing such activism becomes. It seems reasonable (to say the least) to suggest that the leadership would not be keen on allowing this type of activism to flourish. Lying Flat? If activist responses are not palatable, then what are the options? There is evidence that after a period of trying to get what they want, many young unemployed eventually accept the reality, shift their expectations, and take lower quality jobs and/or move to second or third 8 EuroHub4Sino Policy Paper 2025/17 choice places to work. [21] Others are more or less giving up and moving back with their families and living on their parents income (and often on their pensions). When construction projects are abandoned and the structures left unfinished because of financial problems, they are called “rotten-tail buildings” in China. That is why those who give up and effectively don’t finish their transition into adulthood are now often referred to as “lanwei wa” or “rotten-tail kids” (lan wei in Chinese literally means rotten tail but means unfinished). [22] The term “tang ping” or “lying flat” has a longer provenance than lanwei wa, dating back to 2021. It originally referred to rejecting the “unrelenting” competition to do well with a specific focus on “the so-called ‘996’ work system, which defines a work culture of 9 AM to 9 PM shifts six days a week”. [23] It has evolved into a more general idea of just doing the minimum that you need to do to survive instead of striving to succeed. If you can’t find a job – or the job that you want – then lying flat can be a more attractive option than continuing to struggle to attain the unattainable. Once more we see similarities with disenchanted groups in other countries. But once more we need to think about the specific context of how China’s one-party system functions; or perhaps more correctly, how China’s leaders want it to function. If people withdraw, step back and lie flat rather than take activist action, is this really a problem for the leadership? Surely it is better to have politically inactive apathetic disenchantment rather than political action directed at the ruling party and the political system. While this might be the case, particularly in the short run, the current Chinese leadership does not like apathy. Xi seems to think that it does not provide a sustainable basis for building a new economic model based on greater domestic consumption in the medium term or, more important, for legitimate and strong party rule in the long run. When Xi became Party leader in 2012, one of the problems that he identified for the future of CCP rule was the strained (at best) relationship between the party and the people. Another was what we might call societal malaise. There was no sense of a common cause or a common goal that bound people together into a single social unit. Hence the importance of trying to instil the idea of everybody working together to attain a single overarching and common “Chinese Dream”. Xi’s vision for China is a one where “everyone participates and everyone does their duty”. [24] In his ideal world, even participating to attain personal goals in a “rat race” is not enough, let alone the other extreme of “a society of layabouts”. [25] People should participate to attain collective national goals (though in doing so they will also benefit personally too), and in order to do this the party needs to “rally public support [and] foster a new generation with sound values and ethics”. [26] Is it realistic, though, to expect that the frustration of at least some of those whose expectations and hopes of a future that reflects their educational attainment (typically gained at a considerable financial cost) are not being met will really become the proactive and positive duty-driven participants that Xi is hoping for?