China's faltering economy in focus of WEF Tianjin meeting – DW – 06/27/2025

DW

27-06-2025

The world's second-largest economy is suffering from weak household consumption, and its auto industry is particularly vulnerable. Manuela Kasper-Claridge reports from the "Summer Davos" in Tianjin.
"Even if we only walk, we are faster than others," says Sun as he laughs mischievously. He is using the run-walk imagery to describe the state of the Chinese economy compared to its competitors.
The businessman had been doing well selling real estate in China.
Still, he doesn't want to see his full name published because his business is currently not doing well. There are vacant properties all over, and many apartments are just too expensive.
What about the future, what's next? Sun shrugs, suggesting that everything will turn out fine. The salesman in his fifties is hoping for some innovative signs from the government.
Chinese Prime Minister Li Qiang is as optimistic as ever.
He is speaking at the "Summer Davos 2025" conference in Tianjin, organized by the Switzerland-based World Economic Forum (WEF) and officially called the Annual Meeting of the New Champions.
Around 1,700 participants from all over the world have traveled to the northern Chinese city and are listening with hope.
China reported economic growth of 5.5% in the first quarter of this year. The second quarter also looks good, according to the Chinese premier.
But many in China view the government's optimism with skepticism and prefer to save rather than spend their money right now.
Walking through large shopping centers in Tianjin, it is impossible not to notice the nearly empty stores. Demand for watches, jewelry and designer handbags is low, and customers are few and far between.
In the stylish showrooms of Chinese car manufacturers, most of the salespeople look bored as they stare at their mobile phones.
The latest NIO electric car sits alone in its showroom. With no customers in sight, it doesn't look like anyone wants to give it a test drive.
Even at a nearby hair salon, little is happening on a normal weekday. There are four stylists, but not a single customer.
The lack of spending at home is hitting Chinese automakers particularly hard. Competition for market share is fierce, and because of that prices are in a free fall in some cases. Some brand-new vehicles are being sold at used-car prices, a practice called "zero mileage."
"It is good for the consumers, they are getting cars at very reduced prices and get very advanced, competitive cars," says Killian Aviles, head of Asia Pacific Region for Dekra Group, a vehicle testing and inspecting company that is still doing good business in China with testing and consulting for the automotive industry.
"At the same time the profit margins that the companies have, have been eroded," Aviles told DW.
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Consolidation seems inevitable, and Aviles is not the only one who is convinced of this. "Only the strongest and healthiest will survive," he said.
China could try and ease the situation by exporting more vehicles to Europe, but that would depend a lot on whether the Europeans allow such imports and do not further increase tariffs.
Yet, a lot of experts don't think the Chinese economy's strong dependence on exports is a viable model for the future.
"China actually realizes that the export-led growth era is over and, of course, it is still struggling with over-investment and excess production," says Diana Choyleva, a senior fellow at the Asia Society Policy Institute's Center for China Analysis.
Choyleva, who specializes on China's economy and politics, is convinced that domestic consumption must increase to keep the economy going.
At the same time, China wants to become a global market leader in as many industries as possible, and visitors are proudly shown select companies around Tianjin. The city is home to one of the world's busiest ports and is focusing on technology like robotics, among other things.
One such company is the Siasun Robot factory, which uses the advertising slogan "Making the world better by Robotics." The company sells its industrial robots in 40 countries around the world, and its product range also includes robots used in the nuclear industry.
However, its latest models aren't on display. Instead, they are only showing off standard machines like those used by the automotive industry.
Still, the growth potential is enormous, a company production manager told DW. "Soon the robots will be building robots themselves," he enthuses. "Where will the people be then?" he asks rhetorically without answering.
On the banks of the Hai River, which flows through Tianjin, many Chinese sit and enjoy picnics. Families with children, the elderly, and many young people are there, too. Some are dancing.
At the same time, many restaurants around town are half-empty just like the shopping malls and showrooms earlier in the day.
Perhaps the restaurants are just too expensive. Or perhaps right now many Chinese consumers would rather save their money for a rainy day. Whatever it is, their homemade food is likely just as tasty as anything they would get in a sit-down restaurant.