China’s Robots Danced on CCTV… But the Economy Is Still Collapsing | Digging into China

Hi, I'm Dong Xiong. Welcome to Digging into China, where we take a deep dive into what's really happening in China and share some unique insights. China's economy has been rough lately, but after seeing all those robots performing on the Spring Festival Gala, a lot of people probably thought, hey, things are turning around. They figure China's robots are so impressive that the economy is about to take off any minute now. Xi Jinping's grand plan to build the nation through science and technology is finally coming true. Let me tell you straight, Xi Jinping's whole science and technology to revitalize the nation thing is a complete scam from start to finish. In the Communist Party's recent propaganda, we keep hearing the same line. All of China's current economic troubles are just short-term. They are not long-lasting problems. Just give the party a little more time, let Chairman Xi's big push on electric vehicles and chips succeed, and our good days will arrive. Not only will we climb out of this economic gloom, overtaking America will be right around the corner. But this story doesn't hold up. It's not that all of China's tech innovations are fake. The real key issue that everyone overlooks is scale, simple size, and volume. Let's look at the economic data. What directly triggered China's current economic slump? It was the real estate sector starting to collapse from 2021 onward. The industry peaked in 2021. Then by 2023, it was racing down the path of full collapse. After the crash, according to estimates from Rhodium Group, China's real estate sector shrank from about $2.9 trillion in total scale in 2023 to $2.1 trillion by 2025, a drop of $800 billion in just two years. And because real estate ties directly into land finance, when housing prices tanked hard, local governments suddenly had way less revenue. With that shortfall, they couldn't keep pumping out massive infrastructure projects like before. So infrastructure investment slowed starting in 2023. The overall scale went from $760 billion in 2023 down to $650 billion in 2025, a drop of $110 billion over two years. Add these two together, real estate and infrastructure, and China lost roughly $900 billion in GDP contribution over two years. That's about the size of Taiwan's entire GDP. Xi has talked for years about taking Taiwan, but in the end, China's economy lost Taiwan's worth in just two years. So what filled that huge hole? According to the party's narrative, it's the new three, solar, batteries, new energy vehicles, plus AI robots, all these high-tech innovations. But in reality, that's not what happened. From National Bureau of Statistics data, China's main emerging industries, the new three, solar, batteries, new energy vehicles, plus robots and AI, created around $820 billion in GDP in 2023. By 2025, even with all the hype around the new three, AI and robots, that figure only grew about $980 billion. Two years of growth added just $160 billion. That's nowhere near enough to offset the drop from real estate, and it barely covers the infrastructure decline tied to the real estate mess. Since the emerging sectors aren't pulling their weight, what actually filled the gap from real estate and infrastructure falling? It was China's old reliable superpower, exports, and specifically cheap, manufactured exports. China's total exports were $3.38 trillion in 2023, jumping to $3.77 trillion in 2025, a $390 billion increase over two years. That's the main thing that offset the real estate drop. Why call it cheap exports? Look at what made up that $390 billion growth. How much came from high tech? Not a lot. Robots and AI? Robots are just emerging. AI is mostly for domestic use in China, basically zero exports there. So skip those. What about the new three, which have been going for years? Their contribution was shockingly small. Official data shows the new three's combined exports were growing to nearly $1.3 trillion by 2025, about $240 billion growth over two years. That converts to roughly $34 billion. Total export growth was $390 billion. So the new three accounted for only about 8.5% of the increase, not much impact at all. Strip out the new three and what's left? China's traditional strength, cheap manufacturing, cheap small commodities, cheap digital products, all that stuff. And lately with Chinese e-commerce going global, cross-border e-commerce has exploded, flooding the world with small parcel goods. You might not see much about this in the news. Mostly you hear about the EU and US cracking down on small parcels from China as part of their restrictions on cross-border e-commerce. The party doesn't talk about it much. But behind the scenes, the real scale is huge. National Bureau of Statistics data puts cross-border e-commerce exports at 1.84 trillion RMB in 2023, jumping to 2.18 trillion by 2025, a cumulative growth of $340 billion or about $48 billion over two years. This fast-growing cross-border e-commerce has bigger export scale than the new three and a bigger contribution to growth than the new three. Naturally, its economic impact is larger too. But do you see this name mentioned online? Does the CCP hype it up? No. Why not? Because it fits a different narrative. If we peel back the data on China's economy, what do we really see? After the real estate collapse in 2021 created massive downward pressure, pressure that could have crashed the economy outright, China held it on by relying on cheap labor and cheap manufacturing oriented toward exports. Of course, to produce all that cheap stuff, people have worked harder, wages haven't gone up. The party doesn't talk about that much. Instead, they polished into a different version. The first half is similar. Real estate failed, causing economic problems. But the second half changes. In the party's story, it's the new three and tech innovations that kept the economy from collapsing. Lately, the party has been pushing this idea non-stop, while quietly sidelined the cross-border e-commerce that's actually creating value and keeping things afloat. They praise emerging industries without holding back, like the robots that keep showing up on the spring festival gala, or especially the new three. Take photovoltaic, one of the new three. Exports have been hit hard these past two years, dropping from $437 billion in 2023 to under $300 billion in 2025, a huge fall. But the official line never mentions the drop. They just say that during the 14th five-year plan, total shipments in photovoltaics broke $180 billion, or something like that. Then there is electric vehicles, the best performer in the new three. The news tells you exports broke 2 million units in 2024, then surged again in 2025 to nearly 4 million in one year, selling like crazy overseas. But they never mention that as sales rose, prices fell too. The actual value increase for new energy vehicle exports isn't as impressive as the volume hype suggests. The whole amazing new three combined only grew exports by $34 billion over two years, less than cross-border e-commerce's increase by a third. Clearly underperforming. And lately, news leaks back from outside the wall. The US and EU keep imposing restrictions on China, targeting both electric vehicles and small parcels. To them, both are threats. But the party only publicizes restrictions on electric vehicles, never on small parcels. Why? Because it pushes Xi Jinping's narrative of science and technology revitalizing the nation. So in the past few years, Xi's tech revitalization strategy has had some effect. But its positive impact on the economy has been massively overhyped by propaganda machines. And not just in the past, it's being overhyped for the future too. Take the new energy vehicles. China already holds 60% of global sales, even if it gets crazy and reaches 80% of the world market. So what? Will that drive GDP growth enough to offset real estate drag? No. And the likely outcome is repeating the photovoltaic's path. A couple of years ago, photovoltaic used price advantages to grab nearly 90% of global shipments. But instead of the market growing forever, it saturated. Places didn't need more, and exports actually failed. Knowing full well that these tech innovations can't really offset downward pressure or become the pillar for future growth, why does the party keep pushing this narrative? Two reasons. First, it comforts people. Two versions of economic truth. One is surviving on cheap manufacturing, the other is surviving on tech breakthroughs. Which sounds better to you? Obviously, the second. Cheap manufacturing ties right to cheap workers and cheap labor. It means we stayed cheap or got even cheaper to avoid collapse. That hurts to hear. It doesn't feel like great power rise or pride. Nobody wants to hear we succeeded through hard work and suffering. People prefer we succeeded because we are smart. Tech innovation sounds grander, more imaginative, more hopeful. If tech brought growth, then we can look forward to even bigger breakthroughs, like lithography machines, reusable rockets, leading to good lives. The future feels promising. What hope does cheap manufacturing growth offer? Surviving by grinding harder is painful and feels like a last resort. Who wants to look forward to getting even cheaper to outgrind everyone else? That sounds hopeless, not exciting. Second, this propaganda covers up the real way out of the mess. To recover and grow again, China has only one path- boost consumption. Looking at the data, with a nearly $900 billion hole from two years of real estate decline, only consumption can fill it. China's consumption is only about 40% of GDP, way below normal countries. That's why, even though China is the world's second-largest economy, with 2025 GDP at 64% of America's, consumption is just 36% of America's in dollar terms. Sad as that looks, it shows huge potential. Even if the economy stays flat for a while, if China could raise consumption to U.S. levels, GDP could jump another $5.8 trillion, far more than the real estate drop, even bigger than the whole real estate sector. Maybe that's too big a step, but just reaching South Korea or EU levels, a 10 percentage point increase, would add about $2 trillion in GDP. Raising consumption is the way, and the only way to escape this economic trap. That's what the mainstream economists and institutions keep calling for. The IMF just recently urged China to shift to a consumption-driven economy. Even pro-CCP economists like Jingke Yu say China must become a consumption nation or it can't keep developing. Sometimes, the party itself talks about stimulating consumption, but those policies never become the main voice like tech revitalization does. They do it quietly. Consumption subsidies, shopping vouchers, and behind-the-scenes letting online consumer loans come back, even though P2P scandals got them shut down hard before. All these policies later, the results are still weak. Why? Because stimulating consumption is fundamentally different from big infrastructure or nationwide innovation drives. The party isn't good at it. Big infrastructure in the past and nationwide tech pushes now follow the same logic, concentrate the whole nation's power on big projects. In that, a highly centralized country like China has an edge, especially one famous for its Qing-style authoritarian system. Democratic countries need laws to build roads, protect workers, and they might face strikes. In authoritarian China, none of that is an issue. They can mobilize the whole country. Authoritarianism has an advantage. For innovation, democracies let markets and companies drive it naturally. China does it top-down with national power. But without real market forces, it tends towards imitation over true innovation. It's like the old Soviet Union, a classic nationwide system. The Soviets industrialized fast, won tech races, did OK. But while the Soviet Union sent the Gagarin into space, its people stood in long lines just to buy bread. Now China faces the same problem. Consumption is about livelihoods. A nationwide system can't force it. You can't make people spend by decree. Consumption depends on many things. Social safety nets. If welfare is good, people aren't worried about sickness or old age. They spend. Expectations for the future. If you are optimistic, you spend. And most importantly, per capita income. If people have money, they can spend. Authoritarian countries tend to exploit heavily, so people have less income. An Asian Development Bank study showed democratic countries' household income averages 71% of GDP. In authoritarian ones, it's 57%. Under the party's nationwide system, China's is even lower, just 40%. Chinese people sometimes want to spend but don't have the money. Consumption is subjective. It is about fair distribution, happiness, security in social welfare, and expectations for society. These are things authoritarian governments struggle to provide. We always say authoritarian regimes are good at fooling people. But that fooling is only good for making people sacrifice for the regime, not for making them feel happy. The party should have shifted China to a consumption powerhouse before the real estate bubble burst. After it burst, they should have dropped the nationwide approach and restructured GDP. But since they are not good at it, we see one nationwide infrastructure push, then after real estate dies, another nationwide tech push. They've been living in their comfort zone. Even when they realize the comfort zone isn't working anymore, that tech drives alone won't fix the economy. And start talking about consumption, they still don't emphasize it much. Why? Because linking weak consumption directly to economic troubles creates conflict between the party, the Chinese people, and development. If you pin growth on tech innovations and it fails, you can blame America, tech blockade. But if you stress consumption and it doesn't rise, people start asking, why can't I spend more? Is the party incompetent? Is it because of the party that we have no money? Plus, consumption is hard to spin. Tech breakthroughs are easy to cherry pick. You can highlight one area where China leads and compare to America. Consumption is raw data, real money. It's easy to compare and lose. Compare too much and people conclude the party is failing, exploiting too hard, blocking development. That breeds resentment towards the party. So the party needs a fake ban like tech innovation to shift contradictions. And this trick works fast. With the economy bad now, how many Chinese people are still talking about the great power rise, dreaming that a party-led tech success will end our hard times? That's a form of brainwashing. But once we really understand the data, we should see clearly who is actually blocking our economic development, who is stopping us from living good lives. Thank you so much for watching. If you find this video helpful, please like it, drop a comment below, and hit the subscribe button right here. It really helps YouTube suggest my video to others. I'll be back with more content soon. Until then, be well.