Debunking the "China's Economy Has Peaked" Theory

With China announcing its new year’s economic growth target in recent days, the Western media’s pessimistic narrative about China has flared up again.

This time, the revamped version is the “China’s economy has peaked” theory.

In 2025, China’s overall economic output for the first time surpassed the 140 trillion yuan mark, and it continues to grow steadily on a high base—something the world has clearly witnessed. At just this moment, the naysayers spread pessimistic sentiment, trying to undermine the public’s confidence in China’s economic prospects. Their intentions are obvious.

When the economy is said to have peaked, what exactly is the “peak”? Is it the size of the economy, the growth rate, or development quality and growth momentum? Objectively speaking, no matter which perspective is taken, the claim that “China’s economy has peaked” runs counter to the facts.

First, look at quantity and speed. After the release of economic data for 2025, some Western media outlets have sensationalized the widening gap in the total economic output between China and the United States. However, the real situation is that GDP calculated using nominal growth rates does not take factors such as inflation into account. If we use purchasing power parity (PPP), accounting for price differences between countries, then according to estimates by institutions such as the International Monetary Fund (IMF), China’s GDP already leads the world.

For many years, China has consistently been the largest contributor to global economic growth. As the size of the economy grows, a 5% economic growth rate corresponds to an economic increase of more than 5 trillion yuan, which is roughly equivalent to the total annual economic output of a medium-sized country. Admittedly, after decades of rapid growth, in recent years China’s economic growth rate has slowed somewhat. But this slowdown is a scientific adjustment made by our country to promote high-quality development and drive economic transformation and upgrading, aligning with the general规律 of economic development in modern countries. Asserting that a nation’s economy will change based solely on a single indicator’s short-term fluctuation will only lead to misinterpretation.

Next, look at quality and efficiency. The doubts about the “quality” of China’s development are no more than three aspects:

First, the claim that China lacks sufficient growth momentum. This kind of argument only sees the difficulties faced by some traditional industries during transformation and upgrading, while ignoring how newly emerging industries, new business models, and new modes are continuously reshaping economic momentum.

Today, China is steadily increasing R&D investment, and growth driven by new momentum is already unstoppable. In 2025, the output of 3D printing equipment, industrial robots, and new-energy vehicle products grew by 52.5%, 28.0%, and 25.1%, respectively. Some traditional industries are accelerating their climb toward the upstream end of the value chain, becoming an important engine for cultivating new momentum and new advantages for development. A well-known UK consulting firm even said, “This is the first time in history that an emerging economy has stood at the very front of the technology frontier.”

To observe a country’s growth momentum, total factor productivity is a key indicator. After industrialization is basically completed, countries where total factor productivity continues to grow are more likely to escape the middle-income trap and enter the ranks of high-income countries. And just last October, an internationally authoritative database, the Penn World Table of the University of Pennsylvania, revised China’s total factor productivity from 2009 to 2023 to show an overall increase, with an average annual growth rate of about 2.1%.

This is an important data revision—one that removes support from those who question that China’s productivity is no longer improving, and it confirms that technological progress is precisely a key driving force behind China’s economic growth.

Second, the claim that China’s demographic dividend has disappeared. This narrative attributes China’s slowing growth rate to population aging, without recognizing that China’s “demographic dividend” is shifting into a “talent dividend.”

A turning point in population is not a turning point in the economy, and the total number of people is not the main factor for judging a country’s development trend. Turning a human resource advantage into a talent resource advantage can offset losses caused by population aging. Because compared with the number of workers, what matters more for economic development is effective labor—namely the product of the number of workers and their education level.

China’s transformation in this regard is especially pronounced. In terms of quantity, China’s labor force resources are about 968 million people, ranking among the top globally. In terms of population quality, in 2025, the average years of schooling for China’s population aged 16 to 59 has reached 11.3 years; based on the average education years of both newly entering workers and retired workers, effective labor is still increasing.

With its massive pool of talent, China has more opportunities to foster disruptive technologies. The emergence of applications such as DeepSeek also shows that China’s “engineer dividend” is beginning to reap returns. Each year, China trains more than 5 million graduates in science, technology, engineering, and mathematics. The total pool of talent resources and the total number of R&D personnel are both the highest in the world, laying a solid foundation for technological innovation.

Third, the claim that China’s domestic demand lacks staying power. This narrative says China’s policy efforts are insufficient, leading to slow consumption upgrades, and it fails to see the vigor of China’s consumer market.

It’s not “insufficient effort,” but that the logic behind how China formulates policy has not been understood. Flooding with large-scale spending and offering extremely strong stimulus are not the direction of China’s policy approach. Just look at this year’s “Government Work Report”: measures such as “implementing plans to increase income for urban and rural residents” and “clearing unreasonable restrictions in the consumption sector” are pragmatic steps to boost consumption at the root.

Although consumption is a slow-moving variable, in 2025 China’s services consumption in areas such as culture, sports, leisure, and transportation and travel has all achieved two-digit growth. Based on international experience, in the late stage of industrialization, developed countries generally go through a U-shaped trend characterized by a decline in the investment rate and an increase in the consumption rate. China is currently in this same process, and its consumption structure is shifting from a survival- and goods-based model toward a development- and services-based model.

In the rising bustle of everyday life, China’s new trends in consumption are written all over it. The “Supe” (苏超) events catching on widely, LABUBU becoming a global hit, hanfu sparking a wave of enthusiasm, and shows where tickets are “hard to get” in one session after another… each consumer highlight is like a new seed breaking through the soil, carrying enormous potential to drive China’s long-term prosperity, and will continue to grow vigorously.

China has gone from being poor and starting from scratch to where it is today. It has gone through all kinds of difficulties and challenges. In the past, it didn’t collapse because of the “China will collapse” theory, and it won’t peak because of the “China’s economy has peaked” theory. Looking to the future, China’s economic strengths are solid and its potential is great: more than 1.4 billion people form a huge demand market; over 200 million skilled talent workers bring a rare dividend; and a complete industrial chain and supply-chain system has become a “testing ground” for new global technologies. Coupled with reforms that never stop and opening that never pauses, China will unleash endless potential.

“Repeat after me: never underestimate China.” This is the “most important insight of 2025” written in an article by Bloomberg News. And on this point, the people of China are even more confident!

Source: Economic Daily

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Responsible editor: Shi Xiu-zhen SF183