China is the world’s second-largest economy at $19.5 trillion — about 63% the size of the United States, and nearly four times Germany, the number three. For forty years its rise was the biggest story in the world economy. The story now is the slowdown, and whether Beijing can manage it.
The greatest growth run in history
In 2007, China’s economy grew 14.2% in a single year. Through the 2000s it averaged double digits, building cities, ports and railways at a pace no country had ever managed. Hundreds of millions of people moved from farms to factories, and from poverty into the middle class. China joined the World Trade Organization in 2001 and became the workshop of the world: if it sits on a shelf in your house, there’s a decent chance it was made there.
That era is over. Growth was 5.0% in both 2024 and 2025 — respectable by anyone else’s standards, but the slowest sustained pace of China’s modern era, and the trend line points one way. The property sector, once a quarter or more of the economy by some estimates once you count everything tied to it, has been deflating since 2021; real estate activity actually shrank in 2024. Local governments that borrowed heavily to build are now digging out. And the workforce has peaked: China’s population, 1.41 billion, is now gently shrinking.
The factory floor of the planet
What hasn’t faded is China’s industrial weight. Manufacturing alone is about a quarter of GDP — 24.8% in 2024, a share no other big economy comes near (the US sits around a tenth). UNIDO figures credit China with roughly 30% of all manufacturing output on Earth, nearly double the American share. It makes more steel, ships, solar panels, batteries and electric cars than any country in history has made of anything.
And the mix keeps climbing the value ladder. The factories churning out cheap t-shirts are increasingly joined — or replaced — by ones building EVs, drones and industrial robots that compete with German and Japanese rivals on quality, not just price. Services, by the way, are now the biggest part of China’s own economy at about 57% of GDP. The “world’s factory” is quietly becoming a services economy too.
Rich country, or not yet?
The tension at the heart of China’s economy is this: divide $19.5 trillion by 1.41 billion people and you get about $13,900 per person. That’s upper-middle-income — Mexico territory, not Japan’s. China is simultaneously a superpower economy and a developing one, with gleaming megacities and rural provinces where incomes look nothing like Shanghai’s.
So the second act is harder than the first. The easy growth — move workers to factories, pour concrete, export everything — has been harvested. What comes next depends on Chinese households spending more, on private companies getting room to breathe, and on whether the state can let go of the levers it has pulled for forty years. The whole world has money riding on the answer.