What are the reasons behind China’s economic slowdown, and what implications does it hold for Australia?

Most Chinese citizens are content with the economy’s current performance, so Beijing is likely to avoid making significant changes to savings, consumption, and investment incentives unless they align with its industrial policy goals.

The only factors that could shift this stance would be the threat of foreign markets closing or a severe domestic recession, neither of which Beijing expects in the near future.

This assessment, made by the US Central Intelligence Agency, appears accurate—but it dates back to 1986 and was originally about Japan, then a rising Asian power. Despite predictions of Japan becoming the world’s leading economy, its rapid growth was followed by property and stock market crashes from which it has never fully recovered.

While there are some parallels between China and Japan, these comparisons have their limits.

China is now America’s primary strategic competitor, whereas Japan still hosts 85 US military bases, many of which are positioned to counter potential Chinese threats.

Today, China accounts for almost one-third of global manufacturing—double that of the US and nearly five times Japan’s share. Over the past decade, China has produced half of the world’s steel, while Japan’s production peaked at just over a third in the 1970s.