China is facing its worst economic crisis in 50 years. With exports to the US nearly frozen due to high tariffs, and traditional markets in Latin America, Africa, and East Asia pulling back, China is struggling to offload its massive stock of consumer goods, electronics, and vehicles.
President Xi Jinping has been making diplomatic rounds in Southeast Asia, including visits to Vietnam, Malaysia, and Cambodia, hoping to create new trade opportunities. Yet, these efforts seem more desperate than strategic, especially given the lukewarm economic performance of these countries and their cautious stance toward angering the US.
Domestically, Xi faces rising discontent within the Chinese Communist Party, with concerns that continued US tariffs could cripple China’s industrial base. To make matters worse, foreign investments are flowing out of China. Unemployment fears are growing, and flashy displays like robots running marathons do little to distract from the reality on the ground.
While some believe selling unsold goods in the domestic market could ease the crisis, China’s internal demand—consuming only half of what it produces—is insufficient to absorb the excess. Clearance sales and incentives won’t be enough.
China’s international image is further strained by allegations of providing technical and satellite support to Yemen’s Houthi rebels, who are attacking Western commercial ships in the Red Sea. These actions may provoke retaliation or diplomatic isolation from Europe and North America.
As social media bypasses state censorship, the Chinese public is becoming increasingly aware of the turmoil. Internally, a power struggle may be brewing, and externally, China’s diplomatic and economic isolation is deepening. The once unstoppable manufacturing giant now faces a critical moment of reckoning.
Kiran Sharma