China faces a deepening economic crisis characterized by a bursting property bubble, rising local government debt, and a controversial mercantilist trade strategy that is triggering global manufacturing shocks.

Key Points

• Beijing has lowered GDP growth estimates and eliminated specific urban job targets amid declining retail sales and reduced fixed asset investment.
• Approximately 50 million rural migrants failed to secure urban employment last year, highlighting significant instability in China's labor market.
• Chinese firms received three to eight times more government subsidies than OECD competitors between 2005 and 2024, fueling concerns over unfair trade practices.
• The European Union’s trade deficit in manufactured goods with China reached €1 billion per day in 2025, contributing to industrial job losses in Germany and France.
• Indonesia has lost nearly 250,000 factory jobs since 2023 as local manufacturers struggle to compete with an influx of low-cost Chinese imports.

Why it Matters

China’s aggressive industrial policy and export strategy are creating a "third China Shock" that threatens manufacturing sectors and political stability across both developed and developing nations. This economic tension forces global markets to navigate the risks of trade protectionism while managing the fallout from China's internal debt and property crises.