BEIJING – As housing sales crash, real estate agent Zhang Yonggang tightens the belt, part of a fall in Chinese consumer demand that is a greater threat to economic growth than Beijing's customs war with Washington.
Zhang, who works in downtown Taiyuan, said his office did not sell any apartments last month after Beijing tightened its lending controls in July to cover housing costs and debt. Zhang, 42 and married to a teenage son, said his income has dropped by half from a year ago.
"I have no money to buy a home and have no plans to change car," Zhang said. "It's definitely the toughest time I've ever seen."
Communist leaders rely on consumers to power China's economy, replacing trade and investment. But buyers, counted by the Customs War and possible job losses, cut spending on cars, real estate and other big ticket purchases.
Economic growth slowed to a low three-decade of 6% over a year earlier in the quarter. ending in September. It is stronger than most major countries, but a burden for Chinese companies that need to repay debt.
Factory operations shrunk more than expected in October, according to an official trade group, the China Federation of Logistics & Purchasing. Analysts said the hint of an uptick a month earlier did not mark the beginning of an improvement.
Communist leaders express confidence China can survive President Donald Trump's toll on exports.
On Thursday, the ruling party's central committee reaffirmed support for private enterprise in a state-dominated economy and gave no indication of plans to change economic strategy.
But executives are openly concerned about the decline in consumer spending and other domestic activity.
Premier Li Keqiang, the top economic official, asked local leaders last week to fight the "downward pressure" on the economy and "make sure that this year's goals are achieved."
"Many real economic entities are struggling with weak domestic demand," the premier said at a meeting with provincial governors, according to a statement from the Cabinet.
Beijing has tried to stick to plans to foster self-sustaining, consumer-driven growth instead of resorting to stimulus s, which usually means splurging on buildings paid for with bank loans. This could ignite an increase in debt that forecasters estimate has risen as high as 300% of China's annual economic output.
"China is willing to accept slower growth, but only up to a point," R Lombard Green of TS Lombard said in a report.
If the loss of work perspective increases, "of course Beijing will have to step in with a big boost," Green said.
Trump's billions of dollars worth of Chinese goods in a fight over Beijing's trade surplus and technology ambitions have beaten exporters. But their impact on the rest of the economy has been less than any predictions expected.
And overall trade is stronger than expected. Shipments to the United States fell almost 1[ads1]1% in the first nine months of 2019, but exports to the entire world were only 0.1%.
Retail sales rose 8.2% over a year earlier in the nine months ended September. But some industries suffered painful contractions: Car sales fell 11.7%.
The pressure is reflected in Anna Li's dilemma. The 28-year-old employee of an information technology company in Beijing plans to buy an apartment, but first she wants a new job. She has seen since last year and found nothing because companies have cut jobs.
"I used to have a plan to buy an apartment next year, but now it depends on the success of my job search," Li said.  The International Monetary Fund forecasts annual growth of 6.1% this year, down from last year's 6.6% and just above the official minimum target of 6%. Next year, the IMF expects a further decline to 5.8%.
Some analysts question whether China is really achieving even that growth, saying the real interest rate may be closer to 3%. They blame gaps in data collection and political pressure to make results look better.
Economic activity may be up to 21% less than official data shows, according to Yingyao Hu and Jiaxiong Yao of Johns Hopkins University.
Government data assumes all investment pays off, but a lot of spending in 2012-17 went to unproductive projects, Hu and Yao said. They cite evidence, including satellite images that depict nighttime cities darker than they should have been with more activity.
This may mean that Chinese debt is higher in relation to the size of the economy than expected. This can further dampen consumer demand because more national revenues must be diverted to repay debt.
Managers try to reassure US and other foreign companies that have postponed or moved planned investments out of China to avoid tariff hikes.
Li, the premier, has told a number of American, European and other visiting business leaders that they are welcome despite Beijing's 15-month war with Trump.
Beijing has announced market opening measures over the past two years, including the abolition of foreign ownership limits in securities trading, automotive production and some other industries.
"I believe the further improvement of China's business environment will provide greater opportunities," Li told Evan Greenberg, chair of the US-China Business Council, which represents companies doing business with China in a meeting on October 17.
The tariff war has meant that Beijing has decided to adapt to slower growth and less reliance on debt in what it sees as a period of strategic competition, Green said of TS Lombard.
Chinese leaders do not want to use credit-driven stimulus and "leave themselves exposed to future economic and financial sanctions," he said.  Plus, Green said, Trump is "the perfect scapegoat" to blame for slower growth.