When Xi Jinping came to power a decade ago, China overtook Japan to become the world's second largest economy. From then on, there was no looking back, only forward momentum. Its annual growth rate since 2012 was 6.7%. Many economists are forecasting that China will overtake the United States as the world's largest economy by 2030.
China has advanced at a sustained pace in the race to become the world's largest economy. In 2021, China's GDP rose to nearly $18 trillion, accounting for 18.4% of the global economy. China's rapid technological advancements pose a strategic threat to the United States and its allies. From 5G to AI, long-standing US leadership is being called into question.
However, currently, the situation looks a little less promising. As Xi prepares for a second decade in power, he faces mounting economic challenges. China is facing postwar social discontent, slowing productivity and innovation shortages. The track of the last 30 years is slowing down.
A crackdown on China's private sector began in late 2020. Alibaba and Tencent alone have lost more than $1 trillion in market value in the past two years. Sales in the e-commerce sector have slowed, hundreds of thousands of workers have been laid off, and unemployment has risen to a record high in Chinese history.
The real estate sector has been hit hard. Thousands of angry buyers are refusing to continue with their instalment purchases. This trend has directly hit the banking system. Thousands of bank depositors have had their money frozen since last July to deal with the blow. This increases the panic.
The banking scandal not only threatened the livelihoods of tens of thousands of customers but also highlighted the deteriorating financial health of China's smaller banks. Growing social discontent and subsequent protests are leading the country to a possible economic collapse, which could threaten Communist Party rule.