Economic Articles

Executive Summary China’s industrial output remained resilient between 2020 and 2025, even as domestic demand structurally weakened. While global supply chains normalized after 2021, China’s production capacity continued to expand—driven by state-directed subsidies, export growth, and state-owned enterprise (SOE) activity rather than domestic consumption. This analysis deconstructs the structural drivers of this imbalance and the resulting macroeconomic stress: Persistent Ove