China's economic miracle, long the envy of the developing world, is showing signs of strain as its companies struggle to turn a profit in an increasingly saturated domestic market.
This chart from the Wall Street Journal paints a grim picture: the share of loss-making firms listed on Chinese exchanges has quintupled since 2010, with nearly a quarter now in the red. This malaise stems from Beijing's dogged pursuit of industrial growth at the expense of consumer spending, a strategy that has led to rampant overcapacity in sectors from electric vehicles to solar panels.
The result is a perfect storm of tumbling prices, anaemic domestic demand, and rising international trade barriers. As Chinese firms flood global markets with their excess production, they face a backlash from Washington to Brussels, with tariffs and anti-dumping measures proliferating.
Without a radical rebalancing towards consumption, China's economy may find itself trapped in a deflationary spiral, trading tomorrow's growth for today's output.
Source: Wall Street Journal
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