China's Slowing Economy & Growing World Role

The world's second-strongest economy, China, stands at the crossroads. With growth decelerating after several decades of breakneck increases, the question is raised of what the future holds. And yet, paradoxically, while facing domestic economic headwinds, China itself continues to extend its reach—economically, politically, and strategically—globally.

How does an economy struggling internally continue to dominate the world stage? What’s going inside China’s borders that has it still reaching outward into the world?

An Accelerating Economic Engine

For much of the last 40 years, China has been an economic powerhouse. With double-digit GDP growth rates in the 1990s and early 2000s, it transformed from a developing nation into a global manufacturing hub and consumer market. However, recent years have told a different story.

Major Indications of Slowdown

GDP Growth Slowdown
GDP rose to around 5.2% in China in 2023, lagging behind pre-pandemic levels and far off the days of double-digit growth of 10%+.
Real Estate Crisis
The defaults of real estate titans Evergrande and Country Garden exposed underlying flaws in China’s property sector—an economy that formerly accounted for up to 30% of GDP (directly or indirectly).
Youth Unemployment
Mid-2023 official figures revealed that the youth unemployment rate rose above 20% so that the government eventually discontinued releasing the information altogether.
Aging Population and Declining Birthrate
In 2022, China recorded its first population decline in over 60 years, raising long-term concerns about productivity and economic sustainability.
Private Sector Crackdowns
Regulatory crackdowns targeting the likes of Alibaba and Tencent have fueled uncertainty that has depressed private investment and innovation.

These all indicate deeper structural problems and not a temporary economic slowdown.

China’s Global Strategy: Going Outward

In spite of such economic pressures, China is more assertive internationally than ever before. As economies contract, some nations pull inward, but Beijing is pushing outward, extending its influence on several fronts.

1. Belt and Road Initiative (BRI)

Initiated in 2013, the BRI has witnessed China commit more than $1 trillion of investments into Asian, African, Latin American, and European infrastructure projects. Despite deceleration at home, BRI remains both an economic assistance tool to regional partners and, through debt, trade, and infrastructure reliance, an instrument of geopolitical linkage to China.

The ports of Sri Lanka and Pakistan
Rail lines on the African continent
Highway systems and power plants of Central Asia

The effort is not necessarily economic—it's about strategic impact.

2. Industrial Power Continues Firm

Despite increased wages and supply chain realignment, China is still the world’s largest exporter. Its manufacturing facilities are still at the center of world production, from electronics to clothing. Western countries can be diversifying sources, but China is still deeply integrated into world supply chains.

3. Technological and Military Developments

China is investing billions into

Semiconductors
Artificial Intelligence
5G networks
Quantum computing
Space exploration

Militarily, it is quickly modernizing the People’s Liberation Army (PLA), creating cyberwarfare, unmanned aerial vehicles (UAV), and hypersonic missile capabilities. Its navy, the PLA Navy, is currently the world’s largest navy ship-for-ship.

4. Trade and Currency Diplomacy

China is increasingly utilizing the yuan to settle international trade, signing bilateral agreements to decrease reliance on the dollar. Brazil, Russia, and Saudi Arabia are embracing the use of the yuan to settle trade, an essential step towards breaking dollar dominance.

Why the Disconnect? How Can China Slow Down but Expand Globally?

It may look counterintuitive—slow economic growth domestically, yet increasing international influence. But several dynamics are at work:

State-Controlled Strategy
The Chinese government can invest resources into strategic goals independent of fluctuations in the short-run economy. Foreign aid, spending on the military, and infrastructure diplomacy are not constrained by quarterly profitability imperatives like the capitalist economy.
Longer Term Objectives
Beijing thinks in decades, not quarters. Transitory slowdowns at home are not perceived to warrant retreating at the world stage, least of all while competing with the models of the West.
Global Vacuum
Where the US and Europe are preoccupied with domestic cleavages, inflation, and war weariness, China is capitalizing on leadership vacuums elsewhere, such as the Global South.

Risks and Limitations

Nevertheless, China's growth is not unlimited. Its slowdown does threaten to jeopardize its international agenda.

Funding Constraints
With growth decelerating, so does China's pace to finance ambitious global ventures. BRI lending has been criticized, with nations facing difficulties to pay it back.
Geopolitical Pushback
India, Australia, and several nations in Europe are reconsidering their relationship with China, which is based on concerns relating to debt traps, data privacy, and Chinese aggression (particularly in the South China Sea, as well as the Taiwan Strait).
Domestic Pressures
Restless middle class, increased inequality, and youth jobless rates could incite social discontent—compelling Beijing to look inward.

What This Means to the World

China’s economic growth and widening global aspirations will further reform the world order. Even during the deceleration period, the nation is aligning itself to be:

An alternative to the capitalist model of the West
A world-class technology innovator
A key actor among multilateral organizations such as the BRICS and the Shanghai Cooperation Organization

But the balancing act is fragile. If economic unrest increases at home, or international opposition to Chinese power builds, the nation will be forced to recalculate.

Conclusion: A New Phase in China

China’s slowdown is not an indication of decline, but a shift. From the growth-at-all-costs to one of sustainability, self-sufficiency, and world power projection

The West does not want to confuse slower GDP growth with diminishing capability. Actually, while China is cooling internally, it is heating up externally in terms of strategic ambition. Whether this leads to world stability or greater competition will be determined by how others react—and how China navigates its own multifaceted change.