China is currently grappling with a significant economic crisis rooted in the fact that its citizens are not spending enough money. The nation now possesses the lowest consumption rate of any major economy in the world, a figure that is lower than that of any major economy recorded over the past 100 years.
This lack of domestic consumption serves as a critical warning sign that China’s underlying economic model is fundamentally broken. The consequences are already visible, with GDP growth experiencing a sharp decline; rates have plummeted from highs of 10 percent or more during the early 2000s to below 5 percent today. Additionally, this trend is contributing to an alarming rise in national debt levels.
The economic impact of this situation extends well beyond China's borders. Because domestic demand is insufficient, the Chinese economy relies on high production levels to avoid mass layoffs. Unable to sell this surplus within its own borders, China has resorted to exporting its excess goods abroad at increasingly lower prices. This practice, known as dumping, has drawn complaints from nations across Europe and Asia, as China’s massive excess production continues to negatively impact manufacturing industries on a global scale.
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