I used to work as an analyst at Changjiang Securities, and I have always maintained a keen interest and love for the Chinese economy. However, now, the Chinese economy is slowing down, unemployment rates are high, and foreign capital is withdrawing. Many people are asking what exactly is wrong with the Chinese economy? How has it gone from years of rapid growth to feeling "stuck" now?
At the 2025 Summer Davos Forum, various scholars and economic experts boldly expressed their views. It is quite rare to hear so many truths being spoken, and they mentioned the following points that are worth pondering!
✅ First: The growth model needs to transform; the old path of relying on investment is no longer viable.
For the past few decades, the Chinese economy has relied on "spending money on construction"—building roads, constructing houses, and developing infrastructure, which drove investment and boosted GDP. But this path has come to an end; real estate, once a pillar, has now become a burden. The real estate sector accounts for 30% of GDP, and it is unrealistic to expect new industries like renewable energy, AI, and advanced manufacturing to "seamlessly replace" it.
✅ Second: Insufficient innovation capability is the core challenge for development.
China's biggest challenge now is not whether short-term GDP looks good, but how to shift from "investment-driven" to "productivity-driven." What is needed for this? Innovation. And innovation is not just a slogan; it requires a good education system, institutional incentives, and a conducive business environment.
We see that China's labor productivity is only about 20% of that of the United States; the coverage of higher education is also far below that of developed countries; the service sector's share is low, and the quality of employment is uneven. All of this indicates that China is still a "developing country," not a "developed economy."
✅ Third: Institutional distortions, especially in the financial and migration systems.
Let’s talk about the structural issues in the financial system. In China, 80% of credit comes from the banking system, not the capital market. This means that most funds flow to state-owned enterprises or "connected individuals," while private enterprises, which are the most innovative and create the most jobs, find it hardest to access funding.
There is also the issue of the household registration system, which hinders the free movement of people. Workers cannot "be unemployed today and move tomorrow to find a new job" like in the United States, because healthcare, education, and social security are all tied to their household registration. This directly affects the efficiency of labor allocation nationwide and drags down overall productivity.
✅ Fourth: China is not a monolith; the "mayor economy" is where the vitality lies.
There is a unique phenomenon in China that I call the "mayor economy": although the country has a centralized system, the economy is highly decentralized. Local mayors and secretaries work harder than entrepreneurs to attract investment and promote local development.
For example, in a certain city in Jiangsu, the mayor took the lead in attracting foreign enterprises, establishing vocational schools, and promoting re-employment, resulting in GDP comparable to Singapore and an increase in per capita income. This shows that China is not incapable of improving; rather, there is an imbalance in development between regions. Some places are capable, daring, and doing quite well.
Overall, the problem with China is not that growth has stalled, but that the direction and mechanisms need to change.
China is not "out of options"; it has reached a point where it must change tracks—
It needs to shift from relying on investment and real estate to a new path driven by innovation, consumption, and the service sector;
It needs to move from resource misallocation to a more equitable and efficient market mechanism;
It must break down institutional barriers to unleash the consumption potential of 900 million low- and middle-income groups.
As long as reforms keep pace, China still has significant room for development. But this depends not only on economic technology but also on policy choices and institutional evolution. This is the "real variable" that deserves the most attention right now.
免责声明:本文章仅代表作者个人观点,不代表本平台的立场和观点。本文章仅供信息分享,不构成对任何人的任何投资建议。用户与作者之间的任何争议,与本平台无关。如网页中刊载的文章或图片涉及侵权,请提供相关的权利证明和身份证明发送邮件到support@aicoin.com,本平台相关工作人员将会进行核查。