Economy/Resources

A prominent Chinese economist recently described China’s economy as a study in stark contrasts — blazing hot in some sectors, bitterly cold in others.

Mao Zhenhua, a professor at the University of Hong Kong’s Business School, made the remarks at a forum analyzing the outcomes of China’s “Two Sessions” — the annual meetings of the National People’s Congress and the Chinese People’s Political Consultative Conference — held earlier this month. The sessions approved China’s 15th Five-Year Plan, covering 2026 to 2030.

On the bright side, Mao noted significant technological advances over the past five years. Young people’s enthusiasm for the tech sector, combined with the wealth-generating capacity of capital markets, has boosted social efficiency. Driven by technological progress and private enterprise, China’s exports have also performed well despite a volatile global trade environment. In these areas, he said, the economy is running hot.

However, Mao painted a sobering picture elsewhere. China has entered its 12th consecutive quarter of deflation, with prices remaining persistently low. Declining corporate profits have slowed wage growth, and weakening investment appetite contributed to a historic contraction in investment last year.

“Outside of high-tech and exports, you know just how cold the economy really is,” he said.

Youth unemployment among those aged 16 to 24 remains stubbornly high despite government efforts. A fading demographic dividend — and the prospect of negative population growth — poses further long-term risks.

While the new Five-Year Plan prioritizes breakthroughs in high-tech and expanding domestic demand, Mao expressed skepticism. Investment is hard to stimulate due to a lack of attractive projects, while boosting consumer spending is equally challenging. With companies struggling to turn profits, taxes remaining high, and employment pressures mounting, he argued that meaningfully raising household incomes — and thus consumer spending — will be an uphill battle.

Source: Central News Agency (Taiwan), March 28, 2026
https://www.cna.com.tw/news/acn/202603280065.aspx

Chinese electric vehicle giant BYD reported annual revenue of 803.9 billion yuan (approximately $110.6 billion USD) for 2024, a modest 3 percent increase year-on-year. However, net profit fell 18 percent to 32.6 billion yuan (approximately $4.5 billion USD), marking the company’s first “growth without profit” financial report in four years. BYD Chairman Wang Chuanfu described the EV industry as enduring a brutal “elimination round.”

Despite the profit squeeze, BYD achieved record sales of 4.6024 million vehicles in 2024, placing it among the world’s top five automakers and retaining its title as the global leader in new energy vehicle sales. The company’s international footprint expanded significantly, with operations in 119 countries and overseas sales reaching 1.05 million units. Total sales for 2025 are projected to hit 5.12 million vehicles.

Monthly domestic sales were inconsistent in the second half of 2024, with BYD failing to break the 500,000-unit monthly threshold in Q4. October, November, and December figures came in at 441,700, 480,200, and 420,400 units respectively. Overseas revenue reached 310.7 billion yuan (approximately $42.8 billion USD), accounting for roughly 38 percent of total revenue, an increasing share compared to the previous year.

The broader context is China’s overcapacity crisis in the EV sector. After 13 years of government subsidies ending in 2022, China’s EV output surged to over 12.8 million vehicles in 2024, yet nearly half of production capacity sits idle. To offload excess supply, Chinese automakers have engaged in a fierce price war, with EV prices dropping 9.2 percent in 2024 and profit margins shrinking to just 4.3 percent. BYD itself launched an aggressive new pricing round in May 2024 with discounts as steep as 34 percent, drawing sharp criticism from industry peers and state media alike.

Source: Central News Agency (Taiwan), March 28, 2026
https://www.cna.com.tw/news/acn/202603280134.aspx

Primary Taiwanese news agency Central News Agency (CNA) recently reported that, China’s export trade is robust, and many of its industries lead the world. However, due to the double blow of domestic deflation and a weakening yuan, China’s share of the global economy has shrunk significantly.

In dollar terms, China’s GDP accounted for a peak of approximately 18.5 percent of the global economy in 2021, at which time its economy was about three-quarters the size of the United States. Many economists predicted that China’s explosive growth would eventually make its economy surpass that of the United States. Contrary to expectations, China’s share of the global economy has now declined, falling to approximately 16.5 percent by the end of 2025. According to the International Monetary Fund (IMF), China’s current economy is less than two-thirds the size of the United States.

However, the combined effects of domestic deflation and a weakening yuan have reduced the relative size of the Chinese economy, denominated in US dollars. Deflation has lowered the value of goods and services in the economy. As a result, even though China produces a record number of goods, the dollar value of its output has stagnated.

For multinational corporations, the shrinking share of China in the global economy is worrying, as the returns they receive from their investments in China have shrunk when converted into US dollars.

Source: CNA, March 20, 2026
https://www.cna.com.tw/news/acn/202603200296.aspx

A commentary published in Qiushi, the official theoretical journal of the Chinese Communist Party, has urged authorities to actively counter what it describes as false narratives about the Chinese economy spread by “anti-China forces,” while shaping what it calls the international community’s “correct understanding” of China’s economic prospects.

The article, titled “Continuously Doing Good Work on Stabilizing Expectations,” argues that expectation management is a critical component of macroeconomic governance, and that the Party leadership places great importance on strengthening related mechanisms. It warns that both domestic and foreign narratives that “talk down” the Chinese economy have misled producers and consumers, undermining the effectiveness of macroeconomic policy. “Confidence is more important than gold,” the piece states, calling for a positive cycle linking stable expectations, stronger confidence, and economic stability.

The commentary calls on government departments across China to respond promptly to public concerns, improve communication with businesses, and ensure policy information reaches the market clearly and proactively. It also urges adherence to “correct public opinion guidance” and innovation in economic messaging to “sing the bright future of the Chinese economy.”

The article warns that as China’s economy becomes more deeply integrated with the world, international opinion increasingly shapes domestic sentiment. It claims that anti-China forces are deliberately spreading variations of “China collapse” and “China threat” theories, and that failing to counter these narratives could dampen expectations among global markets, foreign companies, and foreign investors — and eventually filter back into domestic confidence.

The piece concludes by calling for stronger external propaganda efforts to proactively set agendas and rebut claims such as “China’s economy has peaked,” “China’s overcapacity,” and “foreign capital is leaving China.”

Notably, China’s annual parliamentary sessions this year set the economic growth target at 4.5 to 5 percent, a slight reduction from the approximately 5 percent targets of recent years.

Source: Central News Agency (Taiwan), March 17, 2026
https://www.cna.com.tw/news/acn/202603170100.aspx

Shanxi Province recently announced the installation of three new toll stations along a 120-kilometer stretch of National Highway 108, with a collection period of nearly 30 years, reigniting widespread public frustration across China over the return of national highway tolls.

Under the plan, passenger vehicles under 2.5 tons will be charged 10 yuan ($1.38 USD) per trip, while trucks over 30 tons will pay 70 yuan ($9.65 USD). Locals have blasted the three stations as excessively dense for such a short corridor, with some calling the Shanxi government “legitimate road bullies.”

China abolished highway maintenance fees in 2009, replacing them with a fuel consumption tax built into gasoline prices, effectively making most national roads toll-free. However, since 2024, mounting fiscal pressures have driven local governments to reverse course. Starting in the second quarter of 2025, seven provinces — including Anhui, Gansu, Hubei, Jilin, Shanxi, Jiangsu, and Shandong — launched toll pilot programs on national highways, adding as many as 137 new toll stations nationwide.

Analysts point to two converging crises behind the trend. First, the collapse of China’s real estate market has gutted land sale revenues, a traditional pillar of local government income. Second, the rapid rise of electric vehicles, which now account for over 50 percent of new car sales, has eroded fuel tax revenues — which fell 18% in the first half of 2025 — since EVs are exempt from fuel taxes.

This has left gasoline car owners feeling they are paying twice. One estimate calculated that a fuel vehicle driver covering 15,000 kilometers annually already pays roughly 1,600 yuan ($220 USD) in fuel taxes, and would owe an additional 2,000 yuan ($276 USD) in tolls if 5,000 of those kilometers are on toll roads — the same amount an EV driver pays without any fuel tax obligation.

China’s National Development and Reform Commission has indicated it is studying a road-use fee mechanism for new energy vehicles, though no policy has yet been finalized.

Source: Central News Agency (Taiwan), March 14, 2026
https://www.cna.com.tw/news/acn/202603140189.aspx