China’s breakneck economic growth – which lifted incomes at home and reshaped markets abroad – once seemed as inevitable as a law of nature.
That presumption is now being tested. On March 5, China’s government lowered its official 2026 growth target to between 4.5% and 5% — its least ambitious goal since 1991 and a steep comedown from the double-digit expansion of past years.
The slowdown reflects deep-seated forces – weak consumption, a prolonged property slump and a shrinking workforce, among them – that are reshaping what the world’s second-largest economy can realistically achieve. China’s sheer size is part of the story too: The bigger the economy, the harder it is to generate outsized growth.
Here are six charts that explain what’s happening inside China’s economy.
A Slumping Property Market
For decades, housing was one of China’s most powerful growth engines, turning the property sector into a key store of household wealth.
Over the last few years, however, the property sector has slid into a downturn. A regulatory crackdown on excessive developer borrowing in 2020, followed by pandemic lockdowns that crushed sales and dented household confidence, exposed the fragility of a long, debt-fueled boom. What has followed is a vicious cycle of falling demand, tighter financing and unfinished projects from which the sector has yet to recover.
Home prices have plummeted 30% nationwide from their 2021 peak, according to economists’ estimates, eroding household wealth. Prospective buyers have stayed on the sidelines, wary of further price declines and reluctant to take on long-term debt for assets that may keep losing value. Existing homeowners are often unable to sell without taking a loss. Meanwhile, heavily indebted developers are saddled with unsold apartments, stalled projects and mounting liabilities, pushing many to default.
Since mid-2024, the government has tried to throw the property sector a lifeline. It cut mortgage rates on existing loans, eased purchase restrictions in major cities and lowered transaction taxes. The measures offered brief stabilization but have yet to reverse the downturn.
At their peak, real estate and related industries accounted for as much as a quarter of gross domestic product, according to Bloomberg Economics. That share has since fallen to less than a fifth, and is likely to decline further as China’s government pivots towards high-tech manufacturing and green industries. Those sectors, however, are more capital-intensive and generate fewer jobs, making it hard for them to replace property as a driver of broad economic growth.
Depressed Consumer Spending
China’s property slump has rippled through the broader economy as home values have fallen, households have felt poorer and grown more cautious about spending.
Weak demand has pushed down prices across a wide range of goods and services since 2023. To lure increasingly frugal shoppers, companies have reduced prices to undercut their rivals – reinforcing a deflationary cycle.
Persistent deflation poses a serious challenge. When consumers expect prices to fall further, they delay purchases. That squeezes corporate profit margins, dampens investment and makes it harder for firms to raise wages – further weakening demand and entrenching falling prices.
China’s government refers to excessive competition as “involution” and has made curbing destructive price wars a top priority across industries from electric vehicles to food delivery. Officials are seeking to restore pricing power to help companies rebuild margins and lift wages, in order to revive consumption. But once deflation takes hold, reversing it can be notoriously difficult.
A Shrinking Population
China’s population, at about 1.4 billion, is shrinking at a pace not seen in decades – a stark reversal for a country long defined by its sheer demographic heft.
Births fell to 7.93 million in 2025, the lowest number since at least 1949. They have dropped every year since 2016, aside from a brief uptick in 2024 that may have reflected the Year of the Dragon in the Chinese calendar, which is traditionally viewed as an auspicious time to have a child.
China’s working-age population – those aged 16 to 59 – has also been contracting. In 2025, that age group made up about 61% of the total, down from more than 70% a decade earlier. With the population aging rapidly, the ratio of working-age people to those over 65 – currently about four to one – is projected to halve within two decades.
A smaller workforce and a rapidly aging population have implications for everything from consumer demand to manufacturing output and technological innovation, weighing on China’s long-term growth potential.
Beijing is betting that productivity gains through automation can offset the loss of workers. President Xi Jinping has emphasized that investment in science and technology – particularly biotech, artificial intelligence, semiconductors and robotics – is central to driving China’s economic growth.
A Cooling Job Market
While overall unemployment has remained broadly stable, youth unemployment has surged as millions of new graduates enter a softer job market. These graduates primarily seek white-collar jobs resulting in a structural mismatch between their skills and what’s needed in the job market by factories struggling to hire.
Job insecurity and weak wage growth are complicating efforts to revive consumption. Households uncertain about their income prospects are more likely to save than spend, reinforcing the broader slowdown.
The rapid adoption of automation adds another layer of pressure. Already, the use of robotics and artificial intelligence in manufacturing and services is reshaping labor demand.
Some research suggests this is associated with greater reliance on contract or flexible work arrangements, which tend to offer fewer benefits and less security.
Exports: A Bright Spot
Exports provide a crucial offset to China’s weakening domestic economy. Net exports accounted for roughly a third of GDP growth in 2025, the highest proportion since 1997.
Even as US tariffs on Chinese goods have climbed – reaching as high as 145% at one point in early 2025 and denting exporters’ revenue in the US market – shipments to Europe and emerging markets in Southeast Asia have absorbed much of the slack.
Demand for Chinese equipment and industrial machinery, in particular, has benefited from a global realignment of supply chains. At the same time, Chinese manufacturers have moved up the value chain, increasing sales of higher-end products such as electric vehicles, solar panels and manufacturing equipment. This helped China’s trade surplus to hit a record $1.2 trillion in 2025.
Still, reliance on exports to boost China’s economy in the long-term carries risks. Growth needs to average 4.17% over the next decade for the government to reach its goal of making China a moderately developed economy by 2035, but trade tensions remain high. A growing number of countries – not just the US – are pushing back against surging Chinese imports with tariffs, quotas and other protective measures, raising questions about how long external demand can shoulder the load.
This report is auto-generated from Bloomberg news service. ThePrint holds no responsibility for its content.
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