James Kynge

So the two numbers that I'd like to mention are high-tech manufacturing output that rose 9.4% last year.

And the other number on the other side is retail sales, which grew only 3.7%.

So what you've got is high-tech manufacturing growing at more than double the speed of the amount of money that people are spending on things to buy.

And I think that really sums up the great contradiction of the Chinese economy.

But you'll have your own view on this, Alice.

Yeah, I think it all boils down to a very simple equation.

If China cannot right its lopsided economy, then sooner or later, and we're probably talking about later, several years in the future, this economy will crash.

And the solution to the problem is simply to return more of the fruits of China's advancement to its people.

In terms of per capita disposable incomes last year, the average in China was $6,070.

That was up just 5%.

So what you're seeing is a lot of resources going into gunning the high-tech sector of the economy, making China the manufacturing superstar in the world.

but at the expense of returning more of the earnings to ordinary people, to workers, white collar and blue collar.

If China can't return more of the fruits of its advancement to those people, then they're not gonna have enough money to spend in order to buy the things that China makes

And China is going to remain in this deflationary spiral going forward.

And the world is going to have to continue buying incredibly cheap Chinese products and thereby boosting China's export performance at the expense of competitors all over the world.

So, you know, I think a lot of economists really hope that China can do something to stimulate per capita disposable incomes in China.

But my guess is that will not really happen in 2026.

Yeah, no, I mean, I just think it's so stark that more than the entire population of Japan in China are people living alone.

You know, people between the ages of 20 and 49 living alone.

Not having very much social contact.