It’s Official: China’s Model Is Broken | US-China Tensions | Chinese Economy

The United States and China have initiated reciprocal tariff cuts on approximately $30 billion of imports each, marking a tangible step toward stabilizing trade relations following recent leadership summits. Despite this progress, China’s industrial recovery remains uneven, with August profit growth slowing to 4.2% as demand struggles outside the electronics sector. Concurrently, structural overcapacity plagues China’s massive infrastructure network, where decades of debt-fueled expansion have resulted in underutilized railways, airports, and expressways. Economist Li Xunlei highlights that this investment-led model, once a primary driver of growth, now imposes significant debt burdens on local governments as utilization rates decline. The long-term sustainability of this economic strategy depends on shifting focus from high-visibility construction projects to addressing underlying demographic and productivity constraints, rather than relying on infrastructure spending to artificially stimulate economic activity.