How China’s economic dip will reshape business

by Avery Booker

Data snapshot

China’s economic growth is projected by the Economist Intelligence Unit (EIU) to slow steadily from 4.7% in 2024 to 3.8% by 2028, reflecting broader global economic headwinds and domestic challenges. This downward trend underscores a shift in China’s economic trajectory, influenced by constrained stimulus efforts and evolving global trade dynamics.

The decelerating growth highlights the immediate and long-term pressures that China will face as it navigates a complex economic environment marked by geopolitical tensions like those surrounding the Russia-Ukraine war, structural adjustments and demographic challenges. A rapidly aging population reaching is just one item on policymakers agenda. The country earlier this month raised the retirement age .

Despite these hurdles, China remains a central player in the global economy , though the anticipated slower growth trajectory signals potential disruption for businesses relying on rapid market expansion. Maintaining its pivotal role in the global economy will require adaptation from businesses and policymakers alike.

Analysis

The forecasted deceleration in China’s GDP growth is emblematic of broader structural shifts within the country’s economy. This slowdown is partly a result of the ongoing transition from an export-driven growth model to one increasingly reliant on domestic consumption.

A cornerstone of President Xi Jinping’s economic policy, the concept of “dual circulation” emphasizes strengthening internal markets while maintaining global connections. This approach represents a nuanced shift from China’s previous focus on international integration following a period of industrialization, reflecting the country’s maturing mixed socialist market economy and changing global dynamics.

Additionally, the global economy, shaped by rising geopolitical tensions and protectionist policies, presents significant challenges for China’s external trade and investment.

The EIU’s report notes that China’s slowdown will not only impact domestic growth, but also reverberate across the world. Businesses that have previously capitalized on China’s rapid growth may need to re-evaluate their strategies, focusing on efficiency, innovation, and adaptation to maintain competitiveness.

Furthermore, the anticipated reduction in GDP growth suggests that China may struggle to provide the same level of economic stimulus that has supported global economic stability in the past.

For policymakers, the challenge will be to navigate these economic headwinds while continuing to push forward structural reforms. The shift towards greater domestic consumption, while necessary, will require careful management to avoid exacerbating income inequalities and ensuring sustainable growth.

Moreover, China’s economic policies will need to address the complexities introduced by global trade uncertainties and the need for technological advancement, particularly in the face of increasingly stringent international trade policies and the rise of AI-driven productivity gains concentrated in developed economies.

The Jing Daily Data Snapshot presents a swift take and analysis on the latest data from the leading research firms in the Chinese luxury and lifestyle markets.