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The political situation is further aggravated by external threats, such as potentially sharp increases in U.S. tariffs under Donald Trump’s return as U.S. president. These tariffs could severely impact China’s export-dependent economy and threaten millions of jobs in industrial sectors such as electronics and textiles (Foreign Policy, 2025).
China finds itself in a complex economic crisis characterized by deflationary pressure, demographic challenges, and political uncertainty. Without significant structural changes, the country risks falling into prolonged stagnation similar to Japan’s experiences in the 1990s—but potentially even more severe given the scale of China’s problems today.