The decline of China's 40-year economic boom: what the WSJ says

The economic model that led China from poverty to global power over four decades is on the verge of collapse. The Wall Street Journal argues that this model, which included huge investments in factories, skyscrapers, and road networks, has seen its best days.

China's rising debt and deteriorating relations with the West have led to a rapid slowdown in China's economic growth. The threat of prolonged economic stagnation, similar to that experienced by Japan since the early 1990s, is now palpable.

Analysts see limited opportunities for infrastructure expansion in China. In some regions, excessive bridges and airports have already been built, millions of apartments remain unused, and the return on investment has declined sharply.

Excessive spending and a bubble in China's real estate market make the country's economy vulnerable. Research suggests that at least 20% of apartments in Chinese cities, or about 130 million units, remain empty. With falling demand and rising inflation, many construction companies are on the verge of bankruptcy.

China also faces unfavorable demographics and a growing gap with the United States and its allies. This jeopardizes foreign investment in the country and may affect China's position among middle-income countries.

The International Monetary Fund estimates that China's GDP growth in the coming years will be less than 4%, which is less than half of the last four decades. Capital Economics points to a rapid slowdown in China's growth, which fell from 5% in 2019 to 3% and predicts a further decline to 2% by 2030.

These factors complicate China's task of reaching the top of the global economy and achieving Xi Jinping's goal of doubling the size of the economy by 2035. At the same time, the Chinese economy is operating with a huge debt, which is growing and could reach more than $9 trillion this year.