Yearender-News Analysis: Why "Peak China" rhetoric doomed to failure

BEIJING, Dec. 22 (Xinhua) -- Since China's economic rise began decades ago, it has been accompanied by recurrent predictions of its demise, from warnings of a "China collapse" to anxieties over a "hard landing". All such predictions, however, have proven remarkably persistent yet consistently wrong.

The "Peak China" narrative is one of the latest iterations, with proponents arguing that a confluence of structural headwinds, demographic shifts and a deteriorating external environment has brought the nation's ascent to a halt, citing slowing headline metrics as proof.

Yet as 2025 comes to a close, the rhetoric is colliding with an inconvenient reality. Instead of the predicted stagnation, China's economic record tells a story of resilience and transformation, showing that "Peak China" has joined its failed predecessors, and the only thing truly peaking this year may be the theory itself.

Upbeat economic data underscores this divergence. In the first three quarters of 2025, China's economy expanded by 5.2 percent year on year, laying a solid foundation for meeting the annual growth target of around 5 percent.

Full-year GDP is projected to reach around 140 trillion yuan (about 19.84 trillion U.S. dollars), which will keep China among the world's fastest-growing major economies, according to official estimates. From 2021 to 2024, China's annual economic growth rate averaged 5.5 percent.

"China's economy has shown notable resilience despite facing multiple shocks in recent years," said Sonali Jain-Chandra, who led an International Monetary Fund (IMF) team that visited Beijing and Shanghai early this month.

Recently, the IMF lifted its 2025 China growth forecast to 5 percent, up from 4.8 percent in October, a move echoed by the World Bank, the Asian Development Bank and the OECD, all of which raised their projections in quick succession.

This solid trajectory is reflected not just in numerical expansion but also in fundamental shifts of growth patterns, as the country continued over the past year to pursue high-quality growth and advance an economy driven by consumption and innovation.

Supported by pro-consumption policies, in the first three quarters of 2025, final consumption expenditure contributed 53.5 percent to China's growth, an increase of 9 percentage points compared to the entire previous year. Service consumption grew particularly fast as consumers increased their spending on travel, dining and entertainment.

China's new fiscal and monetary policies have bolstered domestic consumption and investment, noted Elitza Mileva, the World Bank's lead economist for China. Apart from optimism for the 2025 performance, the World Bank also raised its forecast for China's 2026 growth by 0.4 percentage points.

Proactive policies aimed at boosting household consumption, including raising pension benefits and providing childcare subsidies, are expected to strengthen the social safety net, reduce precautionary savings and exert a more sustainable impact on driving domestic consumption, according to Mileva.

In the tech landscape, any sign of a "peak" remains elusive. With the success of globally trending startups like DeepSeek and Unitree Robotics this year, China has embraced key technological breakthroughs that have unlocked new growth potential and made it a global leader in many emerging fields.

To date, China is home to more than 500,000 high-tech enterprises and leads the world with over 40 percent of the global "Lighthouse Factories," which represent the leading edge of smart manufacturing and digitalization. Such technological capabilities position the country to continue enhancing industrial automation and productivity.

Technological advancement has continued to attract foreign capital, with roughly one-third of new foreign direct investment inflows into China going to high-tech sectors, according to World Bank data.

Beyond technological innovation, China's resilience also stems from the transition of demographic dividend to talent dividend, a key advantage that economists believe will shield the economy from the headwinds of an aging population.

According to Lin Yifu, dean of the Institute of New Structural Economics at Peking University, in the era of the Fourth Industrial Revolution, the shorter research and development cycles of AI and big data-driven industries require less capital input, making China's vast reserve of human capital a more crucial factor.

China boasts a growing pool of educated and skilled talent. The country is home to nearly 20 million scientists and engineers, and each year, over 5 million students graduate in science, technology, engineering and mathematics (STEM) from Chinese colleges, a figure that leads the world.

According to Lin, this advantage would be further amplified by China's massive domestic market, which enables new technologies and products to rapidly achieve economic scale.

In a recent case, China's industry regulator granted conditional approval last week for the country's first two electric models equipped with Level-3 autonomous driving capabilities for public road operations, paving the way for real-world application of smart mobility.

At the annual Central Economic Work Conference earlier this month, Chinese policymakers underscored the need to "fully tap the economic potential" next year.

Noting that China's economy has thrived by "overcoming formidable challenges," Han Wenxiu, executive deputy director of the Office of the Central Committee for Financial and Economic Affairs, said the country will move to foster new growth engines across consumption, technology and regional integration.

Wrapping up 2025 also marks the conclusion of China's 14th Five-Year Plan period (2021-2025) and ushers in the next planning cycle, a mechanism that enables the country to pursue long-term goals with policy consistency while allowing flexibility to adapt to shifting domestic and global landscapes.

"Guiding economic and social development through five-year plans embodies the success code of China's governance," said Xiang Wei, an official of the National Development and Reform Commission, stressing that these plans allow for the phased implementation of long-term goals.

"We are using the certainty of planning to cope with external uncertainties," Xiang told Xinhua.

China's future growth potential is enormous, according to Mileva. She particularly highlighted the room for productivity gains through innovation and improved resource allocation. This is crucial because of China's significant role in driving global economic growth, she said.

"What happens in China is very important," Mileva said, adding that the country plays a key role in global value chains and supply chains, and through its exports and active overseas investment, it is bringing more technologies and expertise to the global stage. ■