China’s 5% Paradox: Booming Exports Meet Crashing Real Estate
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| Photo by Rob on Unsplash |
President Xi Jinping’s confirmation that China is on track to hit its 5% GDP target for 2025 frames a narrative of resilience, yet it belies a profound transformation in how the world's second-largest economy generates wealth. By characterizing the year as "extraordinary" and emphasizing a shift toward "innovation and quality," Beijing is signaling that the era of gross-GDP obsession is over, replaced by a strategy of industrial upgrading. This growth was largely carried by a robust export machine that allowed manufacturers to climb the value chain, effectively offsetting the need for the massive, debt-fueled stimulus packages that characterized previous downturns.
However, beneath the headline success lies a stark dichotomy between external strength and internal fragility. The economy is navigating its first annual investment contraction since 1998, coupled with retail sales languishing at near-pandemic lowsa clear indicator that domestic confidence remains shattered by the ongoing property crisis. Xi’s recent directive to crackdown on "reckless" projects confirms that the central government is willing to tolerate localized pain and slower expansion in specific sectors to purge systemic risk. This represents a calculated trade-off sacrificing the velocity of capital for the stability of a high-tech, sovereign economic base, even as the real estate engine that once drove growth grinds to a halt.