What is the real state of China's economy? Can it withstand downward pressure? In the context of intensifying China-US competition, can China emerge victorious? Recently, some have argued that the US stock market's "Magnificent Seven" tech stocks are performing exceptionally well, with continuously rising market capitalizations but reasonable price-to-earnings ratios, while comparable Chinese tech stocks have excessive P/E ratios. This narrative has persisted for over twenty years, and while it initially seemed reasonable, closer analysis reveals significant flaws.
Those who praise the US economy and stock market are not genuinely concerned with economic principles, but rather operate within a predetermined framework that positions America as perpetually dominant and China as merely a follower. Most notably, these same voices advocated that US blue-chip stocks with ten-times P/E ratios were reasonable in the 1980s and 1990s, yet continue to defend the rationality when the Dow Jones index P/E ratio climbed above twenty times. Similarly, they praised the US debt-to-GDP ratio of around 60% as perfect before 2010, but unanimously declare no problems when it now exceeds 119%.
Their fundamental flaw lies in completely ignoring US hegemony while praising the American economy and stock market. They disregard the unfair distribution, pricing, and transfers resulting from this hegemony, zealously promoting the narrative of American multinational corporations' supposed infallibility and insurmountability under the hegemonic framework.
However, after the 2008 US financial crisis, the unfair phenomena in international economic and financial fields under US hegemony became fully exposed, with the backlash effects of American hegemony becoming increasingly prominent. This explains why developing countries, including China, call for establishing a more fair and just international economic and financial order. The emergence of "Trump politics" awakened some who had long pretended to sleep and shattered certain myths about American economic and financial narratives.
This historical context forms the foundation for correctly understanding China's economic situation.
Currently, China's economic advantages include: long-term political stability without the short-sightedness and policy reversals common in Western countries, ensuring stable economic development expectations; combining medium and long-term strategic planning with effective macroeconomic regulation, aligning national development "big picture" with people's "small goals," supported by deep "national sentiment" for economic governance stability; persisting in combining effective markets with proactive government, continuously improving the socialist market economy system with Chinese characteristics, seeking productivity through technological innovation, and promoting the development of new quality productive forces; comprehensive manufacturing categories with manufacturing scale ranking first globally for 15 consecutive years, accelerating upgrades in traditional manufacturing while rapidly cultivating new industries like artificial intelligence, robotics, and biomedicine; a population of over 1.4 billion with more than 400 million middle-income earners, representing a massive, diverse, and highly potential market with positive, hardworking people, rich application scenarios for high-tech and market models, and broad innovation space.
China's established strong economic foundation includes: 2024 GDP approaching 135 trillion yuan, expected to reach 140 trillion yuan this year, with economic output accounting for 17.1% of the world economy in 2024; ranking 10th in the 2025 Global Innovation Index, becoming one of the fastest-improving economies in innovation over the past decade, with 70,160 patent applications under the Patent Cooperation Treaty in 2024, 30% and 45% more than second-ranked US and third-ranked Japan respectively; R&D investment exceeding 3.6 trillion yuan in 2024, with intensity approaching OECD country averages, leading global high-level scientific talent numbers, and annually training over 5 million STEM graduates; Chinese residents' average life expectancy reaching 79 years in 2024, ranking 4th among 53 upper-middle-income countries, demonstrating the "life picture" of China's economic development; social retail sales expected to exceed 50 trillion yuan in 2025, further consolidating its position as the world's second-largest consumer market; serving as the main trading partner for over 150 countries and regions, maintaining the world's top position in total trade volume for consecutive years, with foreign investment attraction and outbound investment ranking among global leaders; demonstrating strong resilience in foreign trade amid adversity, with export growth reaching 6.9% in the first eight months of 2025, and new energy products like integrated circuits and new energy vehicles showing export growth exceeding 20%; actively opening up, establishing 22 free trade zones in seven batches, building Hainan Free Trade Port, with the Belt and Road Initiative becoming a popular international public good and cooperation platform.
China's economy also faces difficulties: while overall technological strength has achieved tremendous leaps, some fields remain constrained by the US and its allies; significant external dependence on certain energy and resources without pricing power control, creating some external constraints; the real estate market entering a historic adjustment period requiring staged "cost absorption," local government fiscal pressures, and household wealth management risks; persistently low prices for consecutive years, reduced social consumption enthusiasm, and insufficient economic growth momentum; structural adjustments showing regression in some sectors, with some enterprises facing operational difficulties, particularly acute for small and medium enterprises.
These difficulties are partly cyclical, some result from short-term supply-demand imbalances, others stem from institutional constraints, and some are imported from external markets. Most importantly, people's enthusiasm urgently needs revitalization. Some officials lack drive but maintain strong official ambitions, indicating prominent contradictions in the cadre mechanism under peaceful conditions. Some young people rely on parents, fear difficulties, and have declining employment willingness with unrealistic expectations. Some experienced officials and workers retire prematurely, causing some units and departments to lack development momentum. A portion of low-income groups' expectations for improved living conditions resonate with economic downward pressure, leading to social emotional instability.
In recent years, the "temperature gap" phenomenon between macroeconomic data and micro-level feelings has received high-level attention, prompting research efforts. Indeed, slow transformation in traditional industries has made life difficult for related enterprises and workers, with reduced employment and compressed compensation in real estate-related industries, but this is not the complete picture. The contradiction between overall economic growth benefits and household distribution cannot be ignored, with the "raise the low, expand the middle, adjust the high" strategy not being implemented adequately, requiring more forceful measures.
Additionally, the issue of implicit income among civil servants and state-owned enterprise personnel requires significant effort to address. In a sense, sustained anti-corruption efforts play a major role in correcting societal income imbalances, but market-based approaches are still needed to resolve income imbalances among civil servants and SOE personnel. This represents an important strategy for stimulating entrepreneurial enthusiasm throughout society.
Regarding external affairs, we must fully recognize America's strategic intent to continue squeezing China's development space and blocking China's transformation into a "world-class nation," counter US suppression actions, create fair competitive environments between China and the US in finance, trade, industry, and technology, and gradually achieve scientific and rational pricing capabilities for Chinese assets. In general product pricing for US exports, serious countermeasures should be studied to move beyond the narrow view of "seeing trees but not the forest" and reclaim rightful international trade pricing power.