More abundance, less prosperity: why 2 Chinas are emerging

For observers accustomed to a market economy, China’s can look like a contradiction. On the one hand, it is an unstoppable juggernaut, a manufacturing superpower with a US$1 trillion-plus trade surplus demonstrating its prowess and leverage across supply chains.

China is also moving up the value chain, producing steel and widgets while also leading the world in solar panels, electric vehicles and the batteries that power them, industrial robots and more. China is even close behind or on par with the United States in biotechnology and artificial intelligence foundation models.

On the other hand, the costs of this tech and export dominance are increasingly apparent. The wealth of households suffers with falling real estate values, recent graduates face a market with 17.8 per cent youth unemployment as of last summer, wages are falling, deflation is growing and an estimated 12 per cent of registered companies are “zombies”.