The Chinese Paradox: One-Third of Its Major Industries Operating at a Loss

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The Chinese Paradox: One-Third of Its Major Industries Operating at a Loss

According to official Chinese statistics, approximately one-third of large-scale industrial enterprises recorded losses in the last fiscal year. However, this figure, which has circulated in international media, requires context. The definition is limited to companies with revenues exceeding 20 million yuan, which excludes small and medium-sized businesses and service sectors. Therefore, it does not reflect the entire Chinese economy, but rather a very specific segment.

A Figure Open to Interpretation

For some analysts, this percentage signals that the Chinese model is exhausted and that the Asian giant relies solely on massive subsidies and cheap credit. The comparison to the Soviet Union, which collapsed under its own inefficiency, is frequent. Nevertheless, other experts point out that these losses are part of an industrial restructuring process and that China still has a long road ahead for development.

The Machine of Subsidies and Dumping

What is undisputed is that the Chinese state has injected colossal funds to sustain its industrial fabric, even when domestic demand cannot absorb production. Excess capacity is exported at prices often below cost, which has eroded European industry in sectors such as home appliances. The disappearance of refrigerator factories in Spain is an example of this dynamic.

Productivity: The Major Pending Task

Productivity data reveals the artificial nature of Chinese competitiveness. Comparative studies show that China is five times less productive than the United States and three times less productive than Spain. This suggests that its export success is not based on efficiency, but on state support and dumping. Meanwhile, Europe finances its welfare state with debt, which largely ends up in the hands of those buying bonds to sustain that system.

Europe Facing the Challenge

The question remains whether the Chinese model is sustainable in the long term or if, like the Soviet case, it will eventually collapse. The pressure on European industry is real, and responses range from protectionism to demanding stricter trade rules. What appears clear is that as long as China continues subsidizing its hyperproduction, competition will remain unequal.

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