Analysis Suggests China GDP Stagnating Amid Property Sector Collapse

New analysis from Rhodium Group suggests that China’s official GDP figures may be significantly overstating the health of the world’s second-largest economy. While Beijing reported a 4.7% growth rate for the first half of the year, independent researchers estimate the actual aggregate growth is likely in the range of 1.5% to 2%. The discrepancy is attributed to a massive contraction in the property sector and stagnant domestic demand.

The collapse of property giant Evergrande, which held debt equivalent to the GDP of Finland, has left a lasting scar on the nation's credit markets. New housing starts have plummeted 77% from their peak, and retail sales growth has slowed to approximately 1%. With domestic consumption flagging, China has pivoted toward an export-led strategy, flooding global markets with electric vehicles, solar panels, and batteries.

This reliance on external demand is creating 'deflationary pressure' for the rest of the world. By exporting excess capacity at lower prices, China is effectively deindustrializing competitors in other regions. Rhodium's projections indicate that if current trends continue, China will increase its share of global export volume by another nine percentage points by 2030.

The report concludes that China's economy is currently suffering from 'low animal spirits' and an overhang of debt that has not been properly written down. As domestic auto sales fall—with even EV sales turning negative in the home market—the government’s pledge of 'extraordinary support' has yet to materialize in a way that revitalizes the household sector. The global community now faces the challenge of insulating their own industries from these intensifying disinvestment pressures.