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China’s economic model that fuelled its rise is running out of steam

Central to China's growth model was the property sector — housing construction, land sales, and real estate investment. The consequences of that dependency are now becoming evident.

For over 30 years, a single statistic has characterised the dynamics of the global economy: China’s growth rate. Consistently, the world’s second-largest economy has expanded at an exceptional pace, often achieving double-digit growth. However, this era may now be approaching its conclusion. During China’s annual parliamentary meetings this week, Beijing indicated its comfort with targeting an economic growth rate of approximately 4.5-5 per cent. While such expansion would be commendable for most nations, for China, it signifies a profound shift. The nation, once perceived as capable of sustaining rapid growth indefinitely, is now transitioning to a much slower trajectory.

This shift is not merely a cyclical slowdown; it signifies the gradual depletion of the economic model that fuelled China’s rise.

The model that built modern China

Over the past four decades, China’s economic growth has been driven by a potent combination of investment, exports, and construction. The nation allocated substantial resources to infrastructure, manufacturing facilities, and urban development. High savings rates, robust state coordination, and an open global trading system facilitated China’s rapid industrialisation.

Central to this growth model stood the property sector. Housing construction, land sales, and real estate investment emerged as pivotal drivers of economic activity. At its peak, the property sector and its associated industries........

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