Editors at National Review Online scrutinize communist China’s economy.
As sour as Americans are about the current economy, they should be profoundly grateful they don’t have China’s instead.
Headlines can be misleading. Last week, Chinese GDP figures came in better than expected, on track for 5.3 percent economic growth. But nearly all that growth is fueled by Beijing’s leviathan state. Consumer spending is weak, hurt by falling property values, and net exports are down. To compensate, the CCP is pouring money into government-run railroads and infrastructure projects.
Zoom out in time, and China’s economic picture looks even bleaker. The nation saw explosive growth over the last several decades, rising to the second-largest economy in the world behind the United States. It became conventional wisdom in the economics profession that China would overtake the U.S. economy by 2030. New York Times columnist Thomas Friedman yearned to adopt Beijing’s model, if only for a day.
That dogma is now undone. China’s GDP has barely budged in the four years since the pandemic, compared to its previous expansion. The Chinese economy was 78 percent of the size of the United States’ in 2021; that share had fallen back to 64 percent in 2024. While American equity markets have been on a tear during the same period, Beijing’s have shriveled.
External shocks cannot fully explain the slowdown. China faced higher energy costs after the invasion of Ukraine but supplemented its supplies by purchasing sanctioned Russian fuel at a discount. Exports to America have collapsed due to President Trump’s tariffs, but only in the last year.
Rather than a short-term contraction, China’s economic slump appears to be caused by structural forces. Household consumption and private-sector investment have stalled out. Exports to the entire world — not just the United States — are stagnant.
That has left government spending as the only remaining engine of growth, largely through the “investments” of state-owned enterprises.
