Predictions that China might indeed become number one have been increasingly frequent since the financial crisis, which slowed growth in the United States and Europe for years afterward. Before the financial crisis, China’s GDP had been growing at double-digit rates for years.
Even in the first decade after the crisis, the Chinese economy grew at an annual rate of between six and nine percent. Then came the pandemic.
“Lockdowns” during the COVID-19 pandemic devastated the economy and trade.
But that wasn’t all. In addition to the pandemic-related problems, China had to deal with the consequences of a collapse in the real estate market. At its peak, the Chinese real estate sector accounted for about a third of China’s GDP.
China, as explained, simply has too many structural problems, a high debt rate among companies and consumers, declining productivity rates, decreasing consumption, and an aging population.
Total debt (government, companies, and households) has meanwhile risen to over 300 percent of GDP. A large portion of that debt falls on local communities and provinces. Foreign direct investments have declined for the 12th consecutive month, falling by 28.4 percent in the first five months of this year alone.
While Beijing invests a lot of money in producing new technologies, some trading partners in the West are increasingly restricting imports from China. “The Chinese economy has invested enormous sums in research and development, in people, and first-class infrastructure.