As China approaches the end of summer 2025, mounting economic data suggests that Xi Jinping’s leadership may represent a decisive break in the country’s four-decade-long economic rise. What once seemed like an unstoppable trajectory toward global dominance now shows signs of stagnation and structural weakness across multiple sectors.
Xi Jinping has achieved unprecedented control over China, becoming the most powerful leader in the country’s 75-year history, surpassing even Mao Zedong. After removing presidential term limits in 2018 and stacking the Politburo Standing Committee with loyalists at the 2022 Party Congress, Xi consolidated control over both the Chinese Communist Party (CCP) and the state. The forced removal of his predecessor Hu Jintao from the Party Congress in front of more than 2,200 party delegates demonstrated Xi’s complete dominance.
Yet this concentration of power has created what analysts call the “dictator’s paradox,” absolute control that has made China more vulnerable rather than stronger. Xi’s centralization has significantly weakened the government’s ability to adapt economic policy by eliminating expert dissent and public discourse, sharply curtailing considerations of alternative policies.
The Central Commission for Deepening Reform, China’s primary economic planning body, met 38 times during Xi Jinping’s first five years in power but has convened only six times since 2022, with no meetings publicly announced since August 2024. This decline reflects a broader trend under Xi’s leadership, in which economists have been punished for reporting negative data and officials have faced corruption investigations after criticizing his policies.
This institutional decline has shaped Xi Jinping’s overall economic strategy. His official doctrine, Xi Jinping’s Economic Thought, formally titled Xi Jinping Thought on Socialist Economy with Chinese Characteristics for a New Era, has become mandatory reading. Rather than serving as a practical guide to economic management, the text functions primarily as ideological propaganda, promoting the same flawed theories that have led China from a period of rapid growth to its current slowdown and stagnation.
Under Xi’s leadership, the Chinese Communist Party has prioritized political control over economic efficiency, reversing many of the market-oriented reforms that once fueled the country’s rise. His economic philosophy emphasizes national security and self-sufficiency over profitability, directing growth toward sectors like semiconductors, electric vehicles, drones, and batteries—even when these efforts sacrifice economic value. The state has taken a stronger role in managing private enterprises, using subsidies to expand manufacturing and exports rather than encouraging domestic consumption.
These policy choices have created significant imbalances. In 2023, investment made up 41.1 percent of nominal GDP compared to a global average of 24 percent, while consumption accounted for just 56 percent, far below the global average of 76 percent.
Xi’s economic performance has been notably weaker than that of his predecessors. During Hu Jintao’s tenure, China’s GDP growth averaged 10.6%, but under Xi, it has fallen to around 5%. However, many analysts suspect the official figures are inflated. The Rhodium Group estimates that real GDP growth in 2024 was likely between 2.4% and 2.8%, well below the government’s reported rate.
The economic challenges Xi faces are structural. Much of his third term has been defined by efforts to manage three critical problems: debt, deflation, and demography. China’s total debt now exceeds 300% of GDP.
Deflation has become a serious concern. Overall price levels declined for a second consecutive year in 2024—the longest deflationary stretch since the 1960s—and factory gate prices have continued to fall in 2025. Youth unemployment is also alarming, having reached 21.3% for 16-to-24-year-olds before Beijing stopped reporting the figure. Authorities later redefined unemployment to exclude recent graduates seeking their first job, which temporarily lowered the rate. Even under this revised definition, the youth jobless rate has climbed back to nearly 15%.
Meanwhile, the severe decline of the real estate sector has further weakened growth. Once responsible for over 25% of GDP when including related industries, real estate was central to China’s investment-driven model, now effectively dismantled.
These domestic economic pressures have triggered an unprecedented exodus of capital and talent, signaling a sharp loss of confidence in China’s economic future. In 2024, net foreign direct investment fell by $168 billion, the steepest decline since 1990, while the capital account recorded a historic $496.2 billion deficit. The renewed trade war under President Trump has further accelerated the trend, with FDI declining an additional 15% in 2025.
There has been a surge in departures of high-net-worth individuals. Henley & Partners estimated that 15,200 Chinese millionaires relocated in 2024, up 28 percent from 2023, the highest total globally. The country’s billionaire class has shrunk significantly, falling from 1,185 in 2021 to 753 in 2024, with the 2024 Hurun Global Rich List reporting a net loss of 155 Chinese billionaires in the past year alone.
The scale of capital flight has overwhelmed official channels. China’s $50,000 annual transfer limit per individual has fueled widespread evasion through illicit methods. Authorities have dismantled over 100 underground money-handling operations and traced nearly $1 trillion in illegal transactions.
The convergence of these economic and political factors suggests a fundamental shift in China’s trajectory. The combination of deflation, debt, demographics, capital flight, and political constraints indicates China may have passed the peak of its economic rise. Nothing matters more to the party than political control. Investors and even Chinese citizens are not Xi’s constituents; his sole constituent is the Communist Party, which prioritizes preserving power over overseeing a thriving economy.
Xi’s path to absolute power may have inadvertently created conditions for China’s strategic decline, potentially making him the leader who stopped rather than advanced China’s rise to global dominance. Whether intended or not, Xi’s policies appear to have fundamentally altered China’s growth trajectory in ways that may define both his legacy and China’s future role in the world. Some experts worry that if China’s ascent is faltering, Xi may resort to chaos abroad, such as triggering a war over Taiwan or in the South China Sea.
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