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Posted on 04/06/2026 7:22:44 AM PDT by MtnClimber
Back in May 2024, I had a post titled “So How Are Things Going In China?” The post was inspired by a New York Times article of April 15 of that year that had reported that China’s economy had grown “more than expected” in the first three months of 2024; and by a just-issued IMF prediction that China’s economy would grow by 5% in 2024. To believe the New York Times and the IMF, in 2024 the Chinese economy was growing at an annual rate of 5% or more. For 2025, China again reported a GDP growth rate of about 5%.
Meanwhile, the reported rates for U.S. GDP growth were 2.8% for 2024 and 2.1% for 2025. It looks like China is beating the pants off us. Surely, it can only be a few more years before China’s economy overtakes ours as the largest in the world.
Well, maybe things aren’t quite that simple. On March 19 the Wall Street Journal had two pieces giving a very different perspective, one in the news pages by Jon Emont, and the other on the editorial page by Joseph Sternberg. Emont’s piece has the headline “Beijing’s Big Problem: An Incredible Shrinking Economy.”
How could China’s economy be “shrinking” when it consistently reports annual GDP growth of 5% or more? Emont:
[B]y one important measure, China’s global heft is shrinking. In dollar terms, China’s gross domestic product, as a share of the global economy, peaked in 2021 at around 18.5%, when it grew to be around three quarters of the size of the U.S. economy. Many economists predicted China’s explosive growth would eventually make its economy bigger than that of the U.S. Instead China’s share of the pie has decreased, ending 2025 at around 16.5% of the global economy. It is now less than two-thirds the size of the U.S. economy, according to International Monetary Fund data.
It all depends on how you measure GDP. If your measure is volume of production in local currency, China’s economy might be growing strongly. But if your measure is the value of Chinese production in the international marketplace, its economy is shrinking.
An indication of how the difference arises can be found elsewhere in Emont’s piece:
[China] is the global leader in strategically important industries such as electric vehicles, solar panels, shipbuilding and humanoid robots.
Electric vehicles? Solar panels? Emont may call these industries “strategically important,” but what they really are is industries that until recently were heavily subsidized in the West, but now many of those subsidies have been withdrawn. As subsidies were withdrawn during 2025, Western manufacturers have rapidly withdrawn from these industries, and taken write-offs of their investments. On EVs alone, in 2025 GM took write-offs in the range of $7 billion; Ford took write-offs of $19.5 billion; and in early 2026 Stellantis took an EV write-off of over $26 billion. All three also significantly cut back production of the EVs.
But in China, that’s not how it works. They continue to produce EVs by the zillions. CNBC reported in September 2025 that the biggest Chinese EV manufacturer, BYD, had cut prices by as much as 30%. With the much lower prices, its deliveries of new vehicles still declined by a small amount.
And then there’s the issue that China’s production statistics may well be substantially inflated. From Sternberg’s piece:
It’s widely understood that the government economic data concerning GDP growth are a lie intended to flatter the party.
Sternberg also highlights other issues in China’s government-directed economy. For example, China has long made easy and cheap credit available to favored and mostly state-owned industries.
[T]he rapid expansion of [credit] for decades has been Beijing’s primary means of achieving economic growth. Despite robust new bank lending of around $680 billion, the total rate of credit growth is slowing dramatically: to 6.1% year-on-year in January, compared with an average of 9% a year in 2017-24 and 18.1% in 2007-16. . . . [T]he efficiency of credit at generating economic growth may be declining even as the pace of credit creation slows. Some 58% of loans in December were made at interest rates at or below the official benchmark lending rate of 3%. . . . [B]anks are struggling to find borrowers (read: in the private sector) that could generate returns above 3%, which is remarkable in a developing economy with enormous potential for catch-up growth if nothing else. Instead banks are lending to inefficient state-owned enterprises and investment pools linked to local governments.
They plow forward providing more and more subsidized credit to produce more and more stuff of less and less value.
Is China’s economy growing or shrinking? It could be either one, depending on what method of measuring you select. But my view is that, by the measures that count, shrinking is the right answer.
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I would like to see metrics on how much manufacturing we are bringing back into the United States.
Considering how many electric appliances are for sale in the US, at big box stores, we should continue to expand made in America.
And that is just one example of an industry that chased cheap manufacturing all over the globe.
Measuring the true rate of growth or shrinkage of the Chinese economy is a tricky enterprise. Do they have an energy shortage, and if so, how has the current world supply of petroleum crude shifted the emphasis of the CCP toward their sustainability of investment and distribution?
Because if there is limited or no growth, then the whole economy is dying on the vine. This does not bode well on either the short term, or as the CCP practices it, the plan for decades and centuries.
How much Chinese “growth” was in ghost cities and other construction projects that are either so shoddy as to soon be worthless or apartments that will never be completed etc....ie toxic debt? Their banks have got to have a gigantic amount of toxic assets on their books.
Bkmk
That takes time and skilled people, the latter of which are in short supply.
The Chinese are lying?
China has an Economy ? WOW
Thanks MtnClimber!
*PING* to you, LonePalm...
There is a lot of speculation about the actual population in China. The one-child policy became ‘two’ in 2016, and then quickly changed again to ‘3’ in 2021. Those changes notwithstanding, the country is now struggling to overcome the culture they themselves created as most parents have no idea how to handle more than one child.
Covid almost certainly hit the country hard as well since their response to the virus could not have been very good. ‘Officially’, forecaster reports are that China’s population stands at 1.424 billion... the highest number ever. I’m not buying that.
If we had reliable energy-consumption figures, then we could make a decent guess on both population and economic growth... my own bet is that they are down around 10% from the years of the late 20-teens.
This article points out that some things never change. The US supposedly has one of the best strategic intelligence-gathering organizations in the world. We have first rate technology, we have supercomputers that can gather data and crunch numbers. We can spy on anyone at any time. We can eavesdrop on any conversation. We have a vast human intelligence network between us and our allies. We spend billions - perhaps hundreds of billions - on intelligence. And yet its still anyone’s guess whether China’s economy is growing or shrinking, how healthy China’s economy is, how badly China is lying about its economic statistics. How dependent China is on exports to the US. On how stable China’s political system is. Is China the powerhouse of the future? Or is China like the Soviet Union in 1988? We really don’t know.
15 years ago, USA manufacturing employees were 6X times more productive than Chinese employees.
Today?
I have no idea.
Well, we were outshoring and loosing manufacturing jobs since 1979.
It would be an miracle to get these jobs back in a YEAR!
But we turned the corner!
According to Marx, communism is highly superior to capitalism, so communist economy must grow a lot faster than any capitalist economy.
When it did not, the communists cooked the books!
Standard procedure!
So it is really hard to know the real situation.
it’s hard to believe anything that comes from China.
Ghost cities, real estate collapse, EV’s purchased by the government and left to sit, etc., etc..
Their population is shrinking, the one-child policy catching up with them. Some reports are alarming. It’s really difficult to know what to believe.
BOTH!
China can do no wrong, and terribly scary awesome at the same time.
wash on, wash off.
LOOK OUT!
We can write any article and have no solid information.
SpyNavy
Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)
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