Thank you for raising these very important questions, because as a Marxist and socialist, these are the issues most close to heart for me rather than the amazing technological breakthroughs in China. I have many on the table, for example, class division, rural/urban divide, healthcare system, etc. that I simply haven’t found the time to write amidst a very busy work schedule.

As a starter, it is important to understand why the Chinese economy is in the state it is currently. Whenever you hear someone argues why China should/shouldn’t have billionaires with all the rhetoric without telling you anything about the history of its economic development, especially the watershed moment of the 1994 Tax Sharing Reform, then you know they don’t know what they’re talking about. My favorite one is “China keeps billionaires under their control” lol - if that’s the case, then why would you need billionaires in the first place?

The simple answer is that the decentralized nature of the economy forced the local governments to seek financial support from the rich business elites, who then formed cliques with the government officials and became billionaires in the process. It is a product of the system itself. Read my post here about the 1994 Tax Sharing Reform and its consequences. It explains a lot about why there are billionaires and why the property market booming is such a big deal in China’s recent history.

For class division, I recently came across a lecture from Prof. Wang Ou and while I was writing up the notes, I realized that someone else has already done a professional translation of the full lecture. I strongly recommend you read this article: Wang Ou: Migrant workers, after the honeymoon which is essentially the entire transcript of the lecture translated into English.

Prof. Wang’s research is mostly focused on women migrant workers and the challenges they face after getting married and having kids, but even taking such a glimpse into a slice of the migrant worker’s lives will tell you a lot about class division in China.

I wrote a bit about this in another comment the other day in response to someone else in a different topic, I am reproducing my comment here to add on to what is in the article above:

In China, your hukou (i.e. where you are born, or rather, the residence of your parents) determines your access to housing, education, healthcare, pension/insurance and public utilities in the urban areas. There are ~40% of people with rural hukou registration that are effectively barred from what urban citizens get to enjoy - not completely, but it’s extremely limited.

Currently, there are _{300 million migrant workers (农民工) in China (}40% of the 700+ million total labor force, and nearly the entire population of the US!) who work in the cities but their rural hukou registration limits their access to housing (and education for their kids - both are connected, see below).

Migrant workers are the true underclass that makes your cheap iPhones and build all those amazing infrastructure across China, yet because of their rural hukou registration, are not entitled to public utilities in the cities they work in, because technically they are not residents of the cities they work in. Your home is tied to the village/provincial town you came from. This allows the municipal governments to exploit their labor while providing minimal services in return. (Remember, there is no personal income tax in China (only 70 million people have to pay income tax), the most important tax revenue is value-added tax, so the more labor hours being squeezed out of the workers, the higher tax revenues the local governments receive).

Similarly, employers are not obligated to contribute to pension funds and insurances (五险一金) so migrant workers usually get screwed the worst because they have little to no safety net if they get sick or become unemployed.

It is class division based on where you’re born.

Now, on to housing, more than 60% of them live in rental units, _{20% live in company-provided hostels/dormitories (shared living spaces) and a proportion of them (}20%) did purchase houses (especially with marriage and kids) but mostly in the provincial towns. A lot of them were scammed into purchasing houses because the local governments, in an attempt to drive up land prices, tied education resources to housing, and effectively coercing these migrant working class families to purchase a house in the county in order to even have a chance of sending their kids to public schools due to the points-based system that prioritizes home ownership:

According to Prof. Wang Ou’s research (see my linked article above):

So, how much does it cost for a migrant worker to buy a home in the county? While staying in newly purchased apartments of migrant workers, I calculated the expenses carefully. In a county in southern Jiangxi, homes cost 6,000–7,000 RMB [$852-994] per square meter; in a county in western Guangxi, 4,000–5,000 RMB [$568-710]. A 100-square-meter shell apartment plus full fit-out costs at least 600,000–700,000 RMB [$85,215-99,418]. This is an enormous burden—often draining the savings of two generations and still requiring loans for ten or twenty years.

Education is very important in China (and East Asian culture) as it is essentially the path towards upward social mobility. Many parents who want their kids to even have a chance to get enrolled in public schools were coerced into purchasing a house, because of the point-based system. If they are not wealthy enough to own a house, their kids will not be eligible for public schools (simply not enough places for everyone) even though they are born and raised in the city where their parents have worked for years. In this case, they will have to resort to private schools, which are more expensive and draining on the parents’ expenses. That’s how the system favors the wealthy.

As a result, the parents will often seek the financial support from their parents (the kids’ grandparents) and use their life savings as downpayment for houses, work hard themselves while saving very little to pay the mortgages for 10-20 years, all in the hopes that their kids will have access to good schools.

So, the purchasing of one house is not just about one family, it’s about three generations of people. The plunging property prices in China is now taking its toll on the Chinese households across multiple generations. This is how you get low domestic consumption.

I wish I have more time to write about these in more detail because they are very important and interesting topics to discuss. I hope this is enough to serve as primers for you into navigating these topics.