It would seem that China’s unstoppable linear economic progression is, in fact, coming to an end. To put it simply, the last five years saw China losing its growth rate, which led to the reduction of its share of global GDP from 19% in 2021 to around 16.5% in 2024.
Still, the stagnation of China’s GDP per capita stands as an indication of the vast gap between the country’s global influence and domestic prosperity, with the figure being only a fraction of the US level. At the same time, the political atmosphere in China is such that it impedes economic reform. Although of significance, increasing the level of consumer demand is only a remote priority in the list of issues addressed in the leadership speeches and policy statements.
The halting of the explosive expansion of the property market, which was at one time a major source of growth, representing up to a quarter of the GDP, has led to a depression in the condition of the economy. The excess of housing, the drop in city formations, and weak demand for housing are causing not just growth to slow down, but also local government finances and consumer confidence to weaken. While power from nuclear plants, electric cars, and artificial intelligence remain the core strengths of China, they are merely pockets and do not cancel out the fragility of the larger economy.
Furthermore, the buildup of debt, excessive investment, and low productivity continue to be the problems with which one might liken China to the period of Japan’s economic crisis in the 1980s. China continues to be the home of world-class industries and the place for innovative ideas, yet the trajectory of its overall economy is slowed down by the existence of systemic weaknesses. The immediate problem is whether political changes and structural changes will turn the tide for the better, or the country has already surpassed the moment of its dominant position in the world economy.
