We often say that Chinese people have the habit of saving, which is actually not so much a culture when examined closely, but rather the optimal strategy under specific circumstances.

The older generation experienced a turbulent era, so they had to constantly store food in preparation for the winter. A few years ago, when the economy was booming, people not only didn't save money but also took on loans for decades. After the pandemic began, people lost their sense of security and started saving money crazily again. In other words, the love for saving money is a strategy against the uncertainty of the future.

The following chart shows that in the face of the pandemic impact, the savings rate of various countries has increased, and then gradually decreased, until 2022 when we raised it again.

In these three years, especially in 2022, there were two issues that severely affected people's expectations for the future.

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Firstly, the continuous layoffs and bankruptcy news made everyone worry that one day it would happen to them. During this period, there was a hot search for "concentrated loan repayment tide". Why did everyone suddenly repay their loans? It's simple, they were worried that they would lose their jobs one day, so they quickly repaid the debts and felt relieved.

A piece of data also shows that in 2022, household deposits reached a terrifying 17.8 trillion, an increase of 8 trillion from 2021. So much money was saved instead of being spent, resulting in a loss of 8 trillion in purchasing power and 8 trillion in income in the market.

Secondly, it seems that everyone has been hyping up "global comparison of badness" since I don't know when. Today the United States is not good, and tomorrow Europe will collapse. Nowadays, the expectations for the future are getting worse and worse, not only because we rely heavily on foreign trade, but also because everyone has a line in their hearts. If Europe and the United States are not good, how can we be good? Every word you say may not affect others, but it will definitely affect yourself.

Nowadays, people can casually open an article titled "Talk about your suggestions for the future", and they can guess that the following three points are basically inevitable:

1. Contract all unnecessary consumption;2. Saving money;

3. Never start a business even if it means death.

The issue is that your consumption is someone else's income. If the whole society's consumption contracts, and no one starts a business, no one opens a company or a store, who will hire everyone to work? Where will employment come from?

The problem with employment is not just that a large number of workers can't find jobs, but it will also impact those who are already employed.

The logic is not complicated. If a large population is in the resource pool and hasn't worked for several months, they will inevitably "do anything for a little money." At that time, it will lead to a vicious reduction in wages.

This will cause those who currently have jobs to possibly receive lower wages or be "reassigned." That is, the company's costs are too high, so they choose to fire the current high-salary employees and rehire those who are experienced but unemployed, after all, they will do anything for a little money. Then the whole society will face a terrifying wage reduction.

Therefore, the decline in consumption has never been a matter of a few people, but a big problem for the whole society. It will inevitably lead to a contraction of the whole society's income, and it may fall into a "deflationary spiral."

That is, everyone is pessimistic about the future, no one consumes, enterprises can't sell goods, and they reduce layoffs. Everyone finds that the economy has not improved, and they save more money and reduce consumption, creating a vicious cycle.

This is not the end. The next step is the young people's "sterilization and health preservation," which means not getting married, not buying a house, not buying a car, not having children, and saving money hard to fight against the unknown and risks.

Why is the government particularly sensitive to the decrease in the number of newborns?As a middle-aged person, I actually have a lot of feelings, because children themselves represent the biggest expenses in a person's life. If you want to have a child, you have to get married, right? And getting married means buying a house, right? Even if you don't buy a house, you have to rent a larger one, right? Don't all of these require spending money?

After the child is born, those who can afford to buy a car basically do so, because having a car is really important for taking the child to the hospital and going out to play.

Next comes endless expenses, such as training classes, interest classes, annual trips, various clothing expenses for the child, dining out together, and so on.

Young otaku may not feel this, but after graduating from university for five or six years, you still have no wife or children. You might spend a holiday by buying a few skewers downstairs, bringing two cans of beer, playing a few games, watching a movie, and having a perfect holiday. But once you have a wife and children, it's not that easy to get by.

Even the top gaming equipment that every otaku dreams of, such as Alienware or ROG, is high-end and costs about 30,000 to 40,000 yuan, which is a high consumption and very impressive. It's only after getting married and having children that you realize what real high consumption is, squeezing every penny out of you and leaving you in debt.

It looks miserable, but every penny you spend is someone else's income, which will bring more job opportunities and economic prosperity, which may in turn lead to an annual increase in your salary. On the other hand, if everyone is cutting back on expenses, it will sooner or later lead to a decline in everyone's income.

This is why almost everyone is worried about the population collapse.

I have said in previous articles that I am not worried about China's future labor force issues, after all, technology can make up for it, but technology cannot make up for consumption no matter what.

In fact, technology boosts consumption in the long term and compresses consumption in the short term.

It's not complicated, because all technology is developed to "reduce costs and improve efficiency." Don't forget, our working class is the biggest cost itself, and the application of new technology is to eliminate a group of workers at the first time.Moreover, all high technologies inherently represent "capital squeezing out labor." Consider this: the more advanced the technology, the fewer people are involved, and their wages are extraordinarily high.

It can even be said that the essence of industrial upgrading is also the mass expulsion of labor, because after the upgrade, the level of automation is high, and there is no need for so many people.

Of course, a large number of new positions will be created, but these positions often require a higher quality of labor. The previous workers cannot be directly converted, which creates a kind of mismatch. It takes a generation to digest this "mismatch." When the Northeast changed from the "Soviet model" to the "Western model," that generation almost never fully adapted in their lifetime.

Understanding these points, let's look again at the hotly debated issue of why, on the one hand, the unemployment rate is high, and on the other hand, there is a complaint about the lack of newborns.

Newborns mean consumption, and the status of consumption in our country is becoming more and more important. Because in the past, no matter how much we produced, it could be sold through foreign trade. Now, with global overcapacity, it is not only dependent on the international market but also on the domestic market. Otherwise, no matter how strong your production capacity is, if you can't sell it, you will die.

Newborns mean endless possibilities, and they can be trained to become algorithm engineers or workers in some future positions. Can the current construction site workers who are laid off go to become algorithm engineers?

This is also what the previous article said: technological progress will lead to a large number of unemployment, while also creating a large number of positions, but the new positions are not for the old workers, and it takes a generation to digest this cost.

However, technology cannot be stopped from being developed. After all, the Qing Dynasty thought that bows and arrows were good and did not need to develop firearms. When the Mongolian cavalry was eliminated by the breech-loading rifle at the Bali Bridge, it was not a matter of choice. Technology must always progress, the difference is whether you move forward on your own or are pushed forward.

In addition, everyone knows the role of real estate and exports in the country in the past two years.

Although the country is going to boost real estate again this year, it is obvious that if the trend of non-marriage continues to strengthen, coupled with the increasing impulse to save money, there will soon be a downward expectation for housing prices. If this expectation is strong enough and there are enough people joining, housing prices, especially in second-tier and below cities, will be hard to hold up.A phrase is now being wildly spread, claiming that the real estate market is facing a decade-long downswing. Such talk is actually very dangerous because it has the potential to become a self-fulfilling prophecy.

It's like the example I mentioned before of a young couple in Tianjin who wanted to get married and buy a house. However, the housing prices in Tianjin have been falling, and by waiting for half a year, they could save half a year's salary. So they decided to stick to renting (the rent is much less than the part of the house price that has fallen), and continue to wait for the housing prices to fall. If everyone doesn't buy, won't the prices keep falling? The continuous fall further strengthens the belief in not buying. In fact, this is a portrayal of the housing prices in Tianjin.

It is precisely because of the above-mentioned issues that there are fewer construction sites starting work now, too many workers have accumulated, they can't find jobs, and they have no money to consume.

The more critical issue is not actually manufacturing. As I have repeatedly mentioned in my previous articles, the main industry that absorbs employment in China is not manufacturing, but the service industry. I found data from 2021, and according to the data from 2021, the manufacturing industry accounts for 28% of GDP, while the service industry accounts for 53%, and the difference in employment proportion between the two is even greater. Manufacturing employment accounts for as high as 18% of the employed population, while the service industry accounts for as high as 48%.

In big cities, those who are engaged in logistics, moving, cooking in restaurants, washing dishes, etc., have been severely affected this time. Software and finance are also part of the service industry, but they are less affected. Now, people in big cities are unwilling to spend money, employers cut costs, and a large number of people in the service industry have been squeezed out.

Now, with the economic downturn, the manufacturing industry has been greatly affected, but it is not the most important. The service industry has been hit the hardest, and the most people have been squeezed out.

Speaking of this, everyone may wonder, why not expand industry?

It can't be expanded, the industry is order-driven, that is, only when someone wants to buy your products can you expand. If you expand blindly, the end result will be overcapacity, products that can't be sold, rotting in the warehouse, and bankruptcy. Our orders mainly come from foreign trade and our own consumption, both of which are a bit weak now, how can we expand production capacity?

It is precisely the combination of troubles like this that has forced the country to use the last resort, that is, to distribute money in any case to those who can't survive.

"Work relief", the meaning of this word is that originally, money was to be directly distributed, but later it was thought better to let them do something, whoever is short of money comes.Here is the translation of the passage into English:

This also has an advantage. On one hand, it prevents everyone from staying at home waiting for money, which could lead to those who have jobs not going to work anymore. The United States has experienced this before. When the pandemic first started, they gave out a lot of money on a large scale, which made many people feel that it was better not to work than to work, so they simply resigned and went home to receive the money.

Moreover, the official documents clearly state, "If possible, try not to use professional construction teams to organize local labor," which means what? It means to be inefficient, because only inefficiency can absorb a large amount of manpower. Some people might think it's better to go back to the old days of carrying sedan chairs, but in fact, the term "work relief" means that the purpose is to distribute money, and efficiency is almost not considered.

So, the economic issue is the top priority from now on. After all, this kind of work relief can only solve temporary problems and cannot continue indefinitely. After all, the government's money is not "water without a source," and it needs to be transferred from other profitable departments. Printing money is also possible, but the cost is too high, which may destroy the entire social foundation, because the renminbi is different from the US dollar, and it cannot go out. The money printed can only circulate internally, and the cost is borne by oneself.

And the core of the economy is to restore confidence.

So, what are the ways to restore confidence?

It must be admitted that there are no particularly good methods.

You can go and see the descriptions of various experts, and I don't know if they can convince themselves. Is it so difficult to admit that there are no good methods?

If there are no good methods, are there any bad ones?

Consumer confidence is like a person's self-confidence. It may be gradually weakened by some bad things, and it becomes very inferior. But if the blows stop, and small successful experiences are accumulated slowly and continuously, confidence will come back.

That is to say, from the current point of view, there is indeed no particularly good method to quickly boost everyone's confidence. However, if you spend a little time, everyone will slowly forget the uncertain days of last year, and feel that life has returned to the right track. Gradually, people will do business as usual, consume as usual, and confidence will be restored.We often hear the term "stimulate consumption." Honestly, consumption is the last thing that needs stimulation. Do we really need someone to encourage us to spend money?

To put it bluntly, it's all about stable expectations. People live based on expectations, which are a reflection of reality. The best expectation is that the future will "get better and better"; a more moderate one is "it will stay the same"; and the worst is "the world is getting worse." People are willing to take on a 30-year mortgage to buy a house because they believe the future will get better.

Last year, the most helpless thing was that it changed the expectation of China's continuous upward trend over the past few decades, making people realize that our country could also experience such things and doubt whether it will happen again in the future. Once this setting is accepted, people naturally tend to be conservative, conservative entrepreneurship (not starting a business), conservative consumption (not consuming), and conservative childbirth (not having children). In the end, the cost of conservatism will be borne by everyone.

Fortunately, people's concepts change quickly. For example, since New Year's Day last year, everywhere was crowded with people, as if the epidemic had never existed. Do you remember the various "new viruses" that were hyped before? Now no one talks about them anymore. Look at the Lantern Festival last night, people were crowded everywhere. If there are no accidents, this year will almost forget the previous unhappiness, and then start to consume. Businesses will start recruiting and expanding production, and the economy will "slowly start."

This is why I said in previous articles that this year's GDP growth of 5% will not be a problem at all. If considering last year's poor performance, it might reach 6%, and it's not impossible to reach 7%.

The following picture is the flow of people in Xinxiang, Henan during the Lantern Festival in 2023:

Expectations are the core and cornerstone of all economic activities. You won't invest in Syria, and you can't buy a house in Somalia, because people's expectations for those places have completely collapsed.

Especially now, the development of any project and technology requires many years, which may absorb a lot of labor during these years. But if the expectations are unclear, then people simply won't invest, save money, and wait and see.

We used to say, "stability overrides everything." Now we should emphasize this point more. Social stability, public security stability, and economic policy stability can give people a sense of stability and no longer worry about sudden changes, so that expectations can be stable.Only when everyone no longer worries about the possibility of sudden changes that could alter the first half of their lives, can investments, home purchases, and raising children proceed smoothly, and then we can re-enter a positive cycle. On this basis, further steady progress in national support, fairness, justice, and the rule of law, among so many people in society, there will always be someone leading everyone to break through on various levels.

A few days ago, I came across a statement that semiconductor chips are inherently what Chinese people are best at, because almost all the core backbones of chip companies around the world are Chinese. This statement is somewhat subjective, as there is no specific statistics to see, but considering TSMC's Zhang Zhongmou, AMD's Su Muzhi, and Nvidia's Huang Renxun, it can be seen that Chinese people are not inferior to the West in both technology and management levels.

What is needed is an open, free, and stable environment that allows geniuses and children to play to their talents. With the soil and the seeds, there is no reason not to believe that towering trees cannot grow. Then, through transfer payments, subsidies can be provided to those who are eliminated by technology, which may be the only way out.

The end of the article, thank you for reading, if you like, give a thumbs up.