Independent research firm Rhodium Group argues China's official GDP data is unrealistically stable and overstates growth. By analyzing expenditure-side components, they estimate recent growth has averaged closer to 2-3%, reflecting the severe property sector collapse.

China reports 5% real GDP growth while experiencing persistent deflation. This is historically unprecedented for an investment-led economy, with the only possible parallel being the 19th-century U.S. The inconsistency suggests official growth numbers are not credible.

While China's high-tech manufacturing output soars (up 9.4%), retail sales lag significantly (up only 3.7%). This stark divergence reveals a fundamentally imbalanced economy that excels at production but fails to distribute wealth to its citizens, suppressing domestic demand and risking a future crash.

China’s economic strategy prioritizes technology and manufacturing competitiveness, assuming this will create a virtuous cycle of profits, jobs, and consumption. The key risk is that automated, high-tech manufacturing may not generate enough jobs to significantly boost household income, causing consumer spending to lag behind industrial growth.

With its domestic, investment-led growth model broken, China has pivoted to an export-heavy strategy. This significant shift creates new vulnerabilities as it must fight for a shrinking pie of global demand amid rising protectionism.

China's domestic crackdown on real estate and local debt has forced a pivot to an export-driven growth model. Exports now constitute a third of GDP, the highest since 1997, while investment's contribution has plummeted. This is a reaction to domestic constraints, not a strategic choice.

Despite rhetoric about shifting to a consumption-led economy, China's rigid annual GDP growth targets make this impossible. This political necessity forces a constant return to state-driven fixed asset investment to hit the numbers. The result is a "cha-cha" of economic policy—one step toward rebalancing, two steps back toward the old model—making any true shift short-lived.

China deliberately maintains an undervalued renminbi to make its exports cheaper globally. This strategy props up its manufacturing-led growth model, even though it hinders economic rebalancing and reduces the purchasing power of its own citizens.

The dramatic drop in China's Fixed Asset Investment isn't a sign of economic failure. Instead, it reflects a deliberate government-led "anti-involution" campaign to strip out industrial overcapacity. This painful but planned adjustment aims to create a more streamlined, profitable economy, fundamentally reordering its growth model away from sheer volume.