For many years now China has been catching up the USA with its GDP productivity and there as a certain inevitability about China claiming that number one slot, at some point, but now this is not such a certainty - China's growth is slowing down.
This doesn't seem to be just a rough patch - China is facing deep-rooted problems that make those old sky-high growth rates look out of reach.
Back in 2021, China’s share of global GDP was about 18%. Now it’s slipped down to around 16.5%. Meanwhile, the US has actually pulled ahead, climbing to roughly 26%. China’s leaders still say they’re aiming for 5% growth, but plenty of outside experts think reality is way below that.
China’s been running on a recipe that really worked for decades: cheap labor, massive infrastructure projects, huge waves of people moving to cities, and an unbeatable manufacturing sector focused on exports. The result? The country lifted hundreds of millions out of poverty, fuelling some of the fastest economic growth the world’s ever seen.
The property market, once a pillar, has crashed. Years and years of overbuilding and mounting debt are catching up. Big real estate developers are floundering, projects are sitting unfinished, investors are jumpy, and local governments are hurting from falling land sales. Add to that a government tightening its grip on private businesses and a steady outflow of capital, and the cracks are very much widening....
And the most stubborn problem might just be demographics.
China’s population is shrinking, thanks largely to the lasting impact of the One Child Policy and a long stretch of low birth rates. Fewer young people entering the workforce means the economy simply can’t grow as fast, unless there’s a giant leap in productivity.
AI will boost things here and there—China’s no slouch when it comes to tech, after all, but it's unlikely this will make up for a shrinking labor pool and slower domestic spending.
This doesn’t mean China’s falling apart. It’s still the world’s second-biggest economy, and obviously a major force in global trade and politics.
What’s changed is the idea that China’s rise is a sure thing that will inevitable end with it overtaking the US.
China will keep growing, likely for years. But the days of easy, double-digit growth and bold predictions of world domination are very possibly behind them.
