China’s economic slowdown is becoming increasingly difficult to gloss over. While official data continues to show modest GDP growth, conditions on the ground tell a different story. Producer prices have now fallen for 38 consecutive months, and consumer prices remain sluggish, reflecting weak domestic demand and deepening deflationary pressure. In November 2025, retail sales rose just 1.3 per cent year-on-year—the slowest pace since the pandemic—highlighting the growing imbalance between excess production and a lack of spending power.
The private sector has borne the brunt of the downturn. Across the country, layoffs, pay cuts and wage arrears have become common in industries ranging from electric vehicles and technology to retail, catering and services. Construction, property and finance continue to shrink after years of decline, while export-oriented manufacturers face mounting pressure from US–China trade tensions and the steady withdrawal of foreign capital. This year has also seen a steady stream of closures among private hospitals and private schools, alongside repeated cases of labour rights violations in the cultural and media sectors.
In retail, the long-running supermarket chain Ren Ren Le closed its doors midway through the year. Employees at the company’s Xi’an headquarters later staged protests, accusing management of transferring assets while maintaining executive pay, even as frontline staff were left with months of unpaid wages and social insurance contributions. Sportswear brand Peak has announced company-wide pay cuts, with some staff in directly operated stores seeing their salaries reduced. Employees who objected were reportedly placed on unpaid leave.
Job losses in the technology sector have continued to mount. Alibaba is reported to have cut more than 100,000 positions over the past two years. Baidu has launched its largest round of layoffs in recent memory, affecting every department, with staff reductions ranging from 5 to 30 per cent. Foreign-invested companies have also been scaling back. Sony shut its Huizhou factory, putting roughly 30,000 workers at risk of unemployment. Canon’s Zhongshan plant also ceased operations, though its relatively generous severance packages were widely praised online as a rare example of “proper” compensation.
The price war in the new energy vehicle sector has further squeezed profits. With overcapacity worsening, manufacturers have moved aggressively to cut labour costs. At BYD’s main plant, blue-collar workers say monthly pay has fallen to around 5,000–6,000 yuan. Neta Auto, now in bankruptcy restructuring, terminated labour contracts while continuing to delay wage payments. Meanwhile, staff at NIO’s sub-brand ONVO say sales employees have been pressured to buy company vehicles themselves or risk losing their jobs, triggering public backlash.
Fiscal pressure at the local level has also begun to spill into public services. Public transport operators, hospitals and schools in multiple regions have reported wage arrears and staff reductions. The healthcare sector has been particularly affected. Private hospitals in several provinces have abruptly suspended operations or closed altogether. In early 2025, Wuhan Baijia Maternity Hospital suddenly shut down, leaving hundreds of doctors and nurses owed months of unpaid wages totalling more than 10 million yuan. Management reportedly became unreachable overnight. Similar cases have since surfaced in Shanghai, Jiangxi and Jiangsu.
Even public hospitals are feeling the strain. In some areas, changes to medical insurance reimbursement rules, combined with tight local budgets, have led to pay cuts and the dismissal of non-permanent staff. In Xinxiang, Henan Province, several hospitals collectively laid off more than 500 medical workers. County-level hospitals in other regions have dismissed large numbers of contract staff, replacing them with outsourced workers in an effort to reduce costs.
Schools are facing similar pressures. In Zhangshu, Jiangxi Province, a secondary school was found to have withheld teachers’ overtime pay for up to eight months, amounting to more than one million yuan. Falling student numbers in many areas have led local authorities to freeze teaching posts, with contract teachers dismissed without compensation just days before the start of the new term. Some private schools, struggling with cash flow problems, have stopped paying wages altogether, prompting reports of teachers taking extreme steps to demand payment.
As the slowdown drags on, unemployment, wage arrears and the erosion of labour protections are no longer limited to the private sector. These pressures are now spreading into public services, becoming a structural problem that is increasingly visible in everyday life—and one that China can no longer afford to ignore.