Gerard DiPippo
Today, one hears two narratives about China's economy. One is about economic decline, and the other is about China's growing economic and technological power.
China's economy has slowed substantially. Local governments are straining under debt burdens. The property sector has nearly collapsed. Consumer confidence is poor. External demand is a brittle support beam, as Western governments consider protectionist measures. China's GDP is no longer catching up to the United States.
China is also the top global manufacturer, leading exports of many goods, investing heavily in high-tech sectors, and innovating rapidly, with DeepSeek being just the latest example.
Although these narratives appear contradictory, both are true.
China's high-tech industries are only a small share of its total economy. Those high-tech sectors shaping the “new economy” are indeed growing, but they aren't large enough to offset overall weakness in the “old economy” weighing down key indicators like GDP growth.
Chinese leader Xi Jinping likely bears some of the blame for the macro slowdown. Beijing's plan to tackle property-sector debt was poorly signaled and didn't account for local fiscal impacts. Stimulus has been cautious. And the government's support for investors and entrepreneurs has been inconsistent.
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