China’s economy is at a transformational moment. For more than two decades, a growth model centered on the debt-fueled construction of housing and infrastructure propelled the country’s rapid expansion. But it reached its limit in 2021, when housing demand peaked. Beijing is now attempting to pivot toward a new growth model.
One of the great questions of our time is how China will emerge from this period of transformation. The goal of this report is to present a clear picture of the economy Beijing wants to build by 2035 and develop potential scenarios for how this might unfold in reality—as well as explore the implications for U.S. policymakers, the U.S. economy, and other Western countries. The report focuses, in particular, on how China’s approach to managing the challenges of debt, demography, and deglobalization might shape its economic trajectory. While long-term forecasts are inherently uncertain and could be quickly derailed by a pandemic, war, recession, or some other major shock, China’s central role in the global economy means it is crucial to develop an informed understanding of the most likely paths this transformation could take—as any changes will quickly ripple outward.
This report was made possible with the generous support of the Smith Richardson Foundation.