An in-depth look at China’s economic crisis, and why inexperience is fuelling the fire

The topsy-turvy roller-coaster ride that has seen China’s economy teetering on the rails for the past four years has left Zack Yao clinging to whatever business he can muster while struggling to determine when the wild ride will end.

At 37 years old, the seller of electric power tools in the eastern province of Zhejiang has never experienced anything like the series of ups and downs that accompanied China’s pandemic years and subsequent attempts to return to economic normality.

“I can still feel the sting every time I recall what I went through,” he said. “The memories are fresh.”

He hearkened back to when “everything ground to a halt in early 2020”, leaving him with no revenue for months, followed by a gradual resumption in economic activities and fluctuating earnings as snap lockdowns were imposed under China’s adherence to a zero-Covid policy. These included lockdowns from March to June 2022 in Shanghai, which borders Zhejiang to the south.

After restrictive pandemic policies were lifted later that year, glimmering hope appeared at the end of the tumultuous tunnel.

“I was overwhelmed by a sudden spike in orders in the second quarter of 2023 after China opened up and the city I live in launched new projects,” he said. “I rushed to rent a new warehouse and hire more shop assistants.”

But to his dismay, gleaned hope warped into a mirage. The business pickup was short-lived, and the woeful ride resumed.

By the end of last year, his sales had plunged back to those dismal 2020 levels as China’s economic malaise took its enduring toll. Yao had little choice but to slash costs where he could, including letting staff go. Still, his combined losses over the past four years, he says, equate to his total earnings in the five years before Covid.