Lhe evolution of the world in 2025 will largely depend on China, the largest exporter and second largest consumer market on the planet. However, the dominant diagnosis of its economic health is profoundly erroneous.
China's GDP is growing, although the exact rate of this growth is a matter of debate. Youth unemployment, which confounded political leaders when it peaked at 21.3% in June 2023, has fallen to 17.6%. Furthermore, the crisis in the real estate market finally seems to be easing, with transactions increasing following determined support for this sector which, directly and indirectly, represents a third of the Chinese economy.
Certainly, the dynamism that characterized the Chinese economy for around thirty years seems to have faded. Consumption growth is slow. Foreign investor confidence is at an all-time low. The current drop in prices raises fears of a deflationary spiral comparable to the prolonged stagnation that hit Japan in the early 1990s. In this context, some now claim that the Chinese economy has already reached its peak.
But these analyzes are not very reliable. They often reflect the views of multinationals concerned about their own profits, or of foreign companies and governments who view Chinese growth unfavorably. This is one of the reasons why observers tend to focus on specific sectors, such as luxury or electric vehicles, which represent only a small part of a large and complex economy.
In their analyzes of the Chinese economy, world policy leaders tend to focus on consumption, which is indeed slowing in China, but the assumption that domestic consumption will stimulate growth remains highly questionable.
Deflationary pressures
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