The Coming China Growth Surprise

For the past years, the Party-state has been driving a controlled deflation of the property market that has created a significant drag upon the overall economy, both directly through the property sector and indirectly through the effects of falling property prices upon consumption. As Leon Liao notes, the fall in housing sales between 2021 and 2025 was equivalent to a reduction of 10-15% of GDP; added to by the subdued levels of consumption growth. In 2020, commercial housing sales were equal to 17.1% of GDP while in 2025 they had been reduced to 6% of GDP; probably falling to around 5% this year.

In the US, the post-GFC property crash was offset by colossal amount of money printing (Quantitative Easing) aided by the reflationary actions of the Chinese Party-state. The deflation of the Chinese property market was handled with a redirection of lending and investment toward the productive forces, instead of creating a new stock market bubble as in the US, and without outside help. The overwhelming driver of economic growth was changed from that of the property market to that of the advanced productive forces; the “green” industries (solar, wind, batteries, grid technology, nuclear, electric vehicles etc.), semiconductors, machine tools, robotics, artificial intelligence etc. As Leon Liao separately notes, China is still taking global market share even in ship building; with Japan becoming a small player and South Korea falling far behind. Together with an expansion in trade helped by the dropping of tariffs on all 44 of the least developed countries (LDCs).

With the property sector now such a smaller share of GDP, any continued contraction will have a much lesser impact upon economic growth. With property prices quite possibly bottoming, or at the least price falls reducing, the deflationary impacts upon consumption will also be limited. In 2026, the economy is also being held back by the removal of central and local government subsidies for car sales; the overall car market has fallen by about 20% this year. This has been offset somewhat with domestic brand exports, but still represents a drag on the overall economy. As a one-off adjustment, it will not be a factor in future years. With the property sector no longer a significant drag on economic growth, and the one-off adjustment in car sales in the past, the rapid expansion of the high technology productive forces will be dominant. Quite possibly creating a positive growth surprise in future years, with China at the least able to continue to maintain 5% economic growth rather than the Western-expected slowdown.

This will be a very unpleasant reality for the Western oligarchs and their courtiers, an unpleasantness which will be added to by the Chinese advances within the high technology sectors; with the massive investments in the educational sector, research and development, and other advanced industry supporting initiatives, providing increasing dividends to the Chinese economy. There will be “Deepseek” moments in many industries during the next 5-10 years. In contrast to a US that is directly undermining its own high technology industries through numerous government policies. From the xenophobic, paranoid and racist harassment of foreign researchers, to the turn away from the “green” industries, to the cuts to state and university research budgets. The possibility of the bursting of the AI bubble creating a severe economic and financial crisis in the West, while China continues its economic growth and march up the technology ladder (including in AI), will provide a stark contrast. Only reinforced by the failures of the attempts to undermine the Safe Asian Space in both Ukraine and Iran, together with the Chinese-driven success in reducing transport-related oil consumption.

By 2030, the decline of the West may be far beyond the ability of the Western media and state propagandists to hide. This probability will mean that the next few years are fraught with risk as the Western elites will find it incredibly difficult to come to terms with a worldview that no longer includes their own supremacy. They may also be beset at home with an increasing lack of legitimacy as the superiority of the socialist market economy in meeting the needs of the many becomes more and more evident to the many. As with WW1, the drive to war can be significantly based upon the need to quell dissent on the home front. As has been shown with respect to both Russia and Iran, and Vietnam beforehand, the Western elites find it extremely difficult to accept defeat.

And this defeat will be on a scale greater than any other, the end of the nearly two century long Western global hegemony and quite possibly the five-decade old Western neoliberal project. They will continue to escalate toward the brink, with the safety of humanity dependent upon them being held back from that brink; by both external and internal forces. Those that complain about the conservative nature in which nations such as Russia and China have conducted themselves must remember that restraining the brinkmanship of the West is a major part of their considerations. The era of Western global hegemony is travelling into the past, but that journey may still be ended through a Western elite global murder suicide; a possibility that cannot be discounted and must be guarded against. And that does not even factor in the eventual international cooperation that will be required to forestall the more existential possibilities of climate change. To win the war but lose human civilization would perhaps be the greatest pyrrhic victory.