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Hate to repeat myself, but the problem is that the Chinese government has been the best student of the IMF, keeping its government deficit under 3% for almost every year except 2020, 2023 and this year is projected to be ~4%:

In order to spend and invest domestically while keeping your deficit low, you need to have add corresponding asset (usually earning foreign currencies) to offset your spending. This led many countries to adopt the export-led growth model to keep their deficit low.

You can also borrow from financial institutions, which is where the bulk of money supply in China came from - deposits created during commercial bank lending:

As a result, China’s M2 money supply is far higher than the US even though its monetary base is much smaller than the US, which “prints” the money freely whenever the US federal government wants to spend e.g. during Covid.

Pay attention to the year it began to rise for China: after the GFC in 2008, the slump from Western consumption caused China to turn to infrastructure building (4 trillion yuan stimulus) to stimulate domestic growth.

Because the local governments receive a much smaller proportion of their tax base after the 1994 Tax Sharing Reform, many local governments began to seek for non-tax revenues in the 2000s. Land premium thus became an attractive source of income for local governments when the real economy took a downturn, and so many local governments speculated on land price by driving infrastructure and housing development in order to raise the land value and then selling/leasing the land at a premium.

In turn, the local governments borrowed heavily through shadow banks (LGFVs) that lend out money from various and often dubious sources. This is known as the “hidden debt” and the true scale of the debt can no longer be known. We know it’s at least 12 trillion yuan, because that’s the amount the central government attempted to help alleviate from the November policy last year. After 2015, the local governments were given the authority to issue their own debt/municipal bonds, and the scale of the debt went further out of control.

Additionally, property development also raises GDP numbers, a main KPI for local official promotion. So essentially it’s a “cheat code” to drive up your GDP by keep building more and more houses while not having to invest in the real economy. Good when consumed in small doses, but when it becomes your obsession, it’s gross misallocation of capital that could have been utilized to directly raise the living standard of the people.

In any case, the question is how are you going to settle the local government debt issue. Since the borrowing occurred domestically, in principle, the central government can write off the debt (though that raises the whole other question of whether it is rewarding the most reckless risk takers). However, this does not appear to be on the table at all, and so everyone has to work harder to pay off the debt. The wealth is being funneled into the financial institutions to help the local governments pay off the infrastructure debt borrowed from a decade ago.

Furthermore, there is also this whole green tech inter-regional competition where, following the new priorities set for green technology since the 14th Five Year Plan, many local governments attempted to jump on the bandwagon. Without much coordination between the regions from the central government, the result is that you have overcapacity. It raised the GDP numbers, sure, but many local governments had also already invested (usually with borrowed money) heavily, giving billions and billions of subsidies to the local industries, so the sunk-cost have given them very little off-ramp to step back from such investments. As a result, more investment is being thrown in and hoping that you kill off the competitors while your own invested company survives the onslaught. And that means the wealth is effectively being funneled into propping up companies that would otherwise have failed.

The central government is recently attempting to consolidate the overcapacity in EVs and solar panels, where the industries have driven themselves into making severe losses since last year. That means some regions will have to be the losers, with billions and billions of subsidies now becoming sunk cost that they can no longer recover.

So there you have it (as a concise version of a much more complex topic) - why Chinese people have to work harder and longer hours despite the country is becoming a superpower. It is mostly ideologically imposed due to adopting the neoliberal framework.

The solution would require the Chinese leadership to abandon their neoliberal policies and simply run up the deficit to spend domestically, without having to accumulate foreign assets or borrow from financial institutions. Besides, deficit spending would allow for jobs guarantee program to sustain full employment, while also resolving the domestic consumption problem.

Surely, there is an obvious solution to this, what is preventing it from being implemented?

The profit motive.
The companies/company leaderships are interested in employing as few people as possible and making each of them work as much and for as little as they can get away with, with workers mandatorily being compensated with less than what the companies get from their labour. That's the whole point of investing in private property that is operated by other people's labour.

The solution would be to re-abolish private property, which would also have the benefits of introducing guaranteed housing and universal healthcare.

Export-led growth. Wages must be kept low to keep prices low.

The only solution to this is boosting the internal market, so the increase in wages is captured by the businesses themselves.