BEIJING (Realist English). Beijing continues to maintain economic growth through industrial production, high-tech exports, and large-scale state support for strategic industries.
However, behind the outward resilience of the Chinese economy remain serious structural problems: weak domestic consumption, a real estate crisis, rising regional debt, and increasing pressure from the United States and the European Union.
According to China’s National Bureau of Statistics, the country’s GDP grew by 5.2% year-on-year in the first quarter of 2026. This exceeded the expectations of most Western analysts, who had forecast growth in the range of 4.7–5%. Industry and foreign trade were the main drivers of the acceleration.
Industrial Production: China Strengthens Its Industrial Model
Industrial output rose by 6.8% in April compared to the same period last year. The fastest-growing sectors include:
- electric vehicles;
- batteries;
- solar energy;
- microelectronics;
- robotics;
- artificial intelligence equipment.
Production of electric vehicles increased by 31%, while lithium battery output rose by nearly 28%.
China continues to build the world’s largest industrial system. The country now accounts for approximately 31% of global manufacturing output — more than the United States, Japan, and Germany combined.
China’s official manufacturing PMI stood at 50.3 points in April. A reading above 50 indicates expanding business activity. Export-oriented enterprises continue to outperform companies focused on the domestic market.
Western analysts argue that China’s current model increasingly depends on state subsidies. According to estimates by Rhodium Group and the American Chamber of Commerce in China, direct and indirect industrial subsidies already exceed 3% of China’s GDP annually.
Experts at the Financial Times note that Beijing is effectively building a “wartime mobilization economy,” in which the key priorities are:
- technological self-sufficiency;
- import substitution;
- control over critical supply chains;
- development of strategic industries regardless of market efficiency.
Exports: The Main Source of Economic Stability
Against the backdrop of weak domestic demand, exports remain the main engine of the Chinese economy.
According to China’s customs authorities:
- exports rose by 14.1% in April;
- imports increased by 25.3%;
- the trade surplus reached $84.8 billion.
China’s total exports for the first four months of 2026 exceeded $1.25 trillion.
The fastest-growing export categories include:
- electric vehicles;
- industrial equipment;
- electronics;
- data center components;
- solar panels;
- rare earth products.
China already controls:
- more than 60% of global battery production;
- around 80% of rare earth processing;
- over 70% of global solar panel manufacturing.
Electric vehicle exports rose by nearly 37% in the first quarter. The main markets remain:
- Southeast Asia;
- the Middle East;
- Latin America;
- Africa;
- partially Europe.
At the same time, the United States and the European Union continue tightening restrictions on Chinese products. The EU is discussing new tariffs on Chinese electric vehicles, while Washington continues its policy of technological containment toward China.
Despite sanctions pressure, China is compensating for losses through the Global South. Developing markets now account for more than 54% of Chinese exports.
Imports and Energy Dependence
China’s imports show mixed dynamics.
On one hand, purchases of the following increased sharply:
- industrial raw materials;
- copper;
- iron ore;
- high-tech components.
On the other hand, amid rising tensions in the Middle East, China reduced oil imports by approximately 20% compared to last year.
In April, China imported around 9.8 million barrels of oil per day, compared to more than 12 million a year earlier.
The reasons include:
- rising global prices;
- risks of supply disruptions;
- efforts to reduce foreign currency spending;
- the use of strategic reserves.
At the same time, Beijing restricted fuel exports to stabilize domestic prices.
According to the International Energy Agency, China remains the world’s largest oil importer, with dependence on foreign supplies exceeding 72%.
Real Estate Crisis and Weak Domestic Demand
The real estate crisis remains the Chinese economy’s main internal problem.
Investment in the property sector continues to decline:
- housing sales fell by another 18%;
- construction investment dropped by 11%;
- dozens of major developers remain trapped in a debt crisis.
The total volume of distressed developer debt is estimated at more than $1 trillion.
Meanwhile, domestic consumption remains weak:
- inflation remains near zero;
- youth unemployment exceeds 14%;
- households prefer saving rather than spending.
Retail sales grew by only 3.2% in April, significantly below industrial growth rates.
Economists at Goldman Sachs and Nomura note that the Chinese economy is becoming increasingly “imbalanced,” with production expanding much faster than domestic demand.
Financial System and Debt Risks
China’s total debt — including government, corporate, and household liabilities — already exceeds 300% of GDP.
Particular concern surrounds regional government debt. According to IMF estimates:
- hidden provincial debt has reached $13–15 trillion;
- many infrastructure projects remain unprofitable;
- regional budgets remain heavily dependent on land sales, while the real estate market is in crisis.
Authorities are trying to support the economy through:
- state-owned banks;
- infrastructure investment;
- preferential lending;
- direct industrial subsidies.
However, Western analysts warn that the effectiveness of such stimulus measures is gradually declining.
What Western Experts Are Saying
Two main views dominate Western assessments of the Chinese economy.
The first argues that China remains highly resilient thanks to:
- centralized governance;
- a massive industrial base;
- technological investment;
- state control over the financial system.
Supporters of this view believe Beijing can maintain growth at 4–5% for many years.
The second group of analysts believes China is gradually entering a period of “structural slowdown” similar to Japan’s experience in the 1990s.
The Wall Street Journal and Bloomberg point out that:
- the property crisis is long-term;
- demographic decline is accelerating;
- the private sector is losing confidence;
- state control is suppressing entrepreneurial activity.
According to a number of American economists, China is effectively shifting from a “consumer economy” to a model of “geopolitical mobilization,” where the main priorities are:
- technological independence;
- strategic security;
- exports;
- industrial dominance.
Main Conclusion
In spring 2026, China remains the world’s leading industrial center and one of the key drivers of the global economy. However, the structure of growth is becoming increasingly unbalanced.
Exports, industry, and state investment continue supporting high growth rates, but weak domestic consumption, debt risks, and the real estate crisis pose long-term threats to the sustainability of China’s economic model.
Amid geopolitical confrontation with the West, Beijing is betting on technological leadership, industrial expansion, and a stronger state role in the economy, turning the industrial sector into the main instrument of the country’s strategic resilience.