Despite China’s first-quarter growth of 5.3%, which surpassed expectations and Beijing’s target of around 5%, the reality faced by households, companies, and even the taxman presents a less optimistic picture. According to the central bank’s urban depositor survey, only 9.5% of respondents saw good job prospects by the end of 2023.

In response to uncertainties, households in China have been saving more, with an increase of 8.6 trillion yuan ($1.2 trillion) in savings during the first quarter. This has led some banks to stop offering long-term fixed-income products in order to protect their margins. The downturn in the market is evident in the CSI 2000 Index, which is down 20% for the year, particularly affecting small-cap companies sensitive to business cycles.

Adding to the economic challenges, government fiscal revenue decreased by 2.3% from a year ago as of February. These indicators suggest that while China’s GDP growth may be strong on paper, there are underlying issues affecting various sectors of the economy that must be addressed in order to maintain long-term stability and growth.