Is this the new normal Xi Jinping promised the Chinese people? Yes and no.

The mass of Chinese youth who cannot find jobs — over 20% by most estimates — is more and more reducing their discretionary spending and making more purchases on secondhand or surplus-item platforms.

“It’s so easy to be fired these days,” said Guo Qingfeng, an IT worker at a large tech firm in Zhongguancun, billed as Beijing’s answer to Silicon Valley, in reference to the leverage companies have to hire and rehire because of the enormous labor pool.

Surplus labor also gives employers the power to squeeze employees to work excessively long hours.

Guo said he’s seen friends and faces disappear from the company over an unwillingness to work the so-called 996 schedule — 9 a.m. to 9 p.m., six days a week. It’s made him nervous for his own job security.

“People I know are thinking more about whether they should buy things that aren’t absolutely necessary,” he said. “We even formed a WeChat group called ‘Second Hand’ that shares links to goods on secondhand platforms and used-goods stores.”

Foreign investors are fleeing China, too, with the country reporting the smallest annual foreign direct investment since the 1990s last year.

From the archives (January 2024): Stock investors pile into China equity funds in ‘world’s most enticing contrarian’ long trade

While the failure of China’s economy to rebound after the coronavirus pandemic and its continued lethargy are shocking to experts and laypeople alike, the slowdown is actually longer in the making.

In fact, 10 years ago, a then–newly appointed president, Xi Jinping, first used the phrase “new normal” to refer to a Chinese economy that was set to slow but would, Xi suggested, be reconfigured into a healthier model.

He spoke at length about the changes that were coming, and how the country needed to prepare. The comments were spread widely by state media, showing it was clearly a message the leadership wanted heard as widely as possible.

While the economy may cool, China’s quality of jobs and industry would be better, he said.

“We must boost our confidence, adapt to the new-normal condition based on the characteristics of China’s economic growth in the current phase and stay cool-minded,” he said.

Xi was both prescient and flatly wrong.

China was indeed in store for slower growth. The economy began a gradual slowdown starting in 2009 after — not because of — the Great Financial Crisis. It rebounded well from that turmoil, thanks to a half-trillion-dollar stimulus, but then began a gradual 10-year decline.

The deceleration happened slowly, almost imperceptibly. The 10% growth in 2010 quietly inched its way down to 5.95% in 2019, even before the pandemic wreaked its havoc. The International Monetary Fund this month said China’s growth rate could sink to 3% next year.

But Xi’s vision of reshaping the economy away from exports and infrastructure, and of taming a perilous property market while pivoting toward domestic consumption, has been an unequivocal failure.

The economy is still manufacturing-focused, billions in stimulus funds are being poured into the most overinfrastructured country in the world, and the property crisis is as bad as ever.

But it is flaccid domestic demand — crippled by extraordinarily weak consumer confidence — that is most glaring in an economy Xi thought would be reignited by the pocketbooks of a billion consumers, experts said.

This lack of spending not only hurts businesses and drags on the economy but means China must continue to rely on surging debt and unsustainably large trade surpluses to maintain activity.

“Attempts to turn the economy around by boosting confidence, whether through a rising stock market or stable housing prices, are mostly wishful thinking. They won’t be enough to reignite healthy growth,” said Beijing-based economist Michael Pettis, who advocates direct cash transfers to households, among other things.

While wages grew steadily in the Xi era, consumption never took a prominent role in the economy. A weak social safety net only got weaker. The cost of raising a child to age 18 in China is now said to be 6.3 times the country’s per capita gross domestic product, compared with roughly two times per capita GDP in Australia and four times in the U.S.

And now the property market is falling and, with it, most average citizens’ savings. The real-estate sector, which accounts for nearly 30% of China’s GDP, holds 70% of household wealth.

When asked if China’s economy was now in its “new normal” of slow growth, 50-year-old Li Jian, who runs a 3D printing company in Beijing, said, “Absolutely.”

“I’m old enough to have seen a gradual economic slowdown. But things were always still humming. Now, we’ve reached some kind of tipping point. Things have stalled. And people can feel it.”

Tanner Brown covers China for MarketWatch and Barron’s.

More Tanner Brown dispatches:

Frosty relations between Washington and Beijing have had a chilling effect on U.S. businesses in China

China prognostication is challenging. Witness 2023. And 2024 warning signs are flashing.

Walmart keeps head above water in China as local supermarkets eat themselves alive

U.S. businesses operating in China are confused and worried. Here’s why.