BEIJING (AP) – China’s progress in building a modern economy, evident in kung fu fighting robots and self-parking cars, is reaching a breaking point as the housing industry slumps, small businesses suffer and young people struggle to find work.
The gap between Chinese leader Xi Jinping’s high-tech artificial intelligence-driven ambitions and the harsh reality of slowing growth is the backdrop for the annual meeting of the country’s largely ceremonial parliament, the National People’s Congress, which begins on Thursday.
At the meeting, which will bring about 3,000 lawmakers to Beijing, top leaders will outline China’s annual growth targets and parliament is expected to approve a blueprint of policy priorities for the five years to 2030.
“What we’re going to see is a trade-off between industrial and technology versus domestic demand,” said Alexander Davey, an analyst at the Mercator China Institute. “These are two priorities that Xi Jinping is currently juggling.”
China’s economy is losing momentum
In a city in southern China’s Guangdong province, families refrained from making major purchases during last month’s Lunar New Year holiday. Even auspicious ornamental plants such as orchids, which are used as symbols of wealth and prosperity, have been reduced in price by 40% compared to last year.
Some small business owners are in a penny pinch. complain Tough times.
China reported Economic growth has reached “about 5%” in 2025, but economists have doubts about some official data.
The relatively steady pace of growth was supported by a surge in exports and strong manufacturing despite US President Donald Trump’s tariff hikes and other trade disruptions.
“Achieving the 2025 growth target is by no means reassuring, as China’s economy is losing growth momentum and widening imbalances and huge structural problems are being masked by a surge in export-led growth,” Eswar Prasad, a professor of economics and trade policy at Cornell University, told The Associated Press in emailed comments.
Real estate recession continues
The downturn in China’s housing market began several years ago, and piecemeal efforts to revive the industry have been only temporary progress. Dozens of real estate developers defaulted on their debts as authorities cracked down on excessive borrowing. overall Housing prices have fallen by more than 20% No recovery is expected beyond 2021.
The meltdown in one of China’s biggest industries has cost hundreds of thousands of jobs, with 12.7 million graduates entering the job market this year and more than 16% of young Chinese people unemployed. Some people just give up, opt out of the rat race, or “lying.”
Families whose main asset is their home have become more cautious about spending, weakening consumer demand and disrupting long-standing efforts to shift the economy toward greater reliance on domestic investment.
Congress could bring new moves to strengthen social services and other supports and measures economists say Outdated and necessary for sustained and steady growth.
China is particular about exports
At least for now, reliance on exports is helping to keep China’s economy humming. China Recorded $1.2 trillion The factory will perform well due to exports, and there will be a trade surplus in 2025. Despite the US-China trade war, the company is increasing shipments to regions such as Europe and Latin America. But it faces pushback from trading partners.
Under Xi, China has prioritized the development of advanced technologies such as AI, robotics, computer chips, electric vehicles and renewable energy. With massive state aid, companies are producing more EVs, TVs, solar panels and other products than China and its trading partners need.
“Achieving these goals will require the government to continue providing subsidies and preferential support to high-tech and strategic industries,” said Lia Fahi, China economist at Capital Economics. “(It) would in turn further encourage overcapacity.”
In a recent report, the International Monetary Fund called on China to cut massive state subsidies and other support for industries that many Western countries say give their companies an unfair advantage over foreign rivals. At the same time, social welfare and other areas of the economy are lagging behind.
The ruling Communist Party’s focus on what it calls “quality development” is expected to continue under the 2026-2030 five-year plan that lawmakers are expected to approve in parliament.
Over the past few decades, China’s transformation into a manufacturing powerhouse has been supported by a boom in the construction of homes, office buildings, roads, ports and railways. However, technology supply chains will become narrower and fewer jobs will be provided. Therefore, the trickle-down effect is much weaker, said Lin Song, chief economist for Greater China at ING Bank.
“Rather, the more successful the so-called industries of the future become, the more they will take resources away from traditional industries that still provide most of the jobs and livelihoods for the majority of people,” said Henry Gao, a professor at the Singapore Management University.
Mr. Xi is expected to further consolidate his power.
The annual conference is an impressive show. Thousands of delegates will fill the Great Hall of the People in central Beijing. A military band plays, and representatives of different ethnic groups participate in traditional costumes.
Despite the pomp, the meeting is mostly routine. The party convention lasts just a week, and a near-unanimous vote on the final day formalizes decisions made in advance by party leaders. This is a show of solidarity that reaffirms the policy and direction they have set.
Its leadership has become increasingly concentrated in one man, Mr. Xi, who has consolidated his power since taking power in 2012. He is now 72 years old and one of modern China’s most powerful leaders. Some analysts believe Mr. Xi will follow in the footsteps of Mao Zedong, the revolutionary leader who founded communist China, and rule for life.
The annual report released at the convention is full of references to the party’s important role “with Comrade Xi Jinping at its center.”
Xi’s military purge is attracting attention
After coming to power, Mr. Xi doubled down on his long-standing anti-corruption campaign, with many officials, including military leaders, forced to resign to face investigations and prosecution.
A few days before Parliament was to sit, it was dismissed. 9 soldiers He was expelled from the ranks, extending a years-long military purge. last month, General Zhang YouxiaThe highest-ranking military official, just below Mr. Xi, was dismissed on suspicion of violating discipline.
A report by the think tank Center for Strategic and International Studies suggested that Xi’s actions could weaken China’s military readiness in the coming years, but are sure to increase the political credibility of China’s military in the long term.
His anti-corruption campaign has eradicated potential political opponents, and his iron grip on power makes it much less likely that other officials will challenge his vision of building China into a self-sufficient technology leader and 21st century world power.
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Chan reported from Hong Kong. AP Business Writer Elaine Kurtenbach contributed from Bangkok.
