“China is winning and losing at the same time. The West currently has no answer to this.
Even German executives—usually so friendly toward China—could only shake their heads in disbelief. Five percent growth? No one believes that anymore anyway, they said. What possesses the leadership in Beijing to stubbornly cling to this figure? Do they not realize how ridiculous they make themselves look, or how they are losing even more trust among the population? Such were the reactions recently when China once again announced economic growth of five percent. This figure bears almost no relation to the actual mood or the perceived economic situation on the ground.
At the same time, university rankings caused a stir by showing that the world’s most research-intensive universities are now—almost without exception—located in China.
According to a ranking by Leiden University, Zhejiang University in Hangzhou holds the number one spot. The fact that the names Zhejiang, Hangzhou, and the university itself likely mean very little to most people in Europe serves as a stark illustration of how poorly the Old World understands its own diminishing relevance. Hangzhou is the capital of Zhejiang province—a region with a population roughly equal to that of France and an economic powerhouse within China, boasting a vibrant entrepreneurial culture. The university, too, is well-known within China as an elite institution; its alumni include, for instance, the founder of Deepseek.
Some refer to this simultaneous convergence of crisis and triumph as ‘Schrödinger’s China’; others speak of a ‘two-speed China.’ China is winning and losing all at once. It manufactures excellent electric cars, yet in the countryside, pensioners lack the funds to heat their homes. It sets humanoid robots dancing and sends humans to the moon, while in its factories, workers toil away for meager wages. It supplies the entire world with goods, yet domestically, consumer confidence has plummeted to rock bottom.
As Western capitals currently reorient their China policies, the central challenge is to find an adequate response to this dual nature of China. For one must not expect that this situation will change anytime soon. For countries and political entities of this magnitude, this is not an unusual state of affairs—and both aspects are simultaneously true.
Poverty and technological breakthroughs coexist in the USA and Europe as well.
For the Western middle powers, a mere disengagement is not a realistic option given the economic and industrial significance of the People's Republic—as Canadian Prime Minister Mark Carney pointed out in Davos.
The China of the past—that welcome yet strategically unthreatening new export market—will not return. This "old China" is today the slow, unattractive China. Beijing does, admittedly, insist that domestic demand is to drive future growth. Even President Xi—who has historically been critical of consumerism—has declared this a strategic objective. Thus far, however, he has met with no success. Central bank data indicates that consumer willingness to spend continues to decline.
The primary reason for this is that the leadership is standing in its own way. It is unwilling to put the brakes on the "fast China"—that is, the world's export champion. A stronger currency, higher minimum wages, or a more robust welfare state would boost the population's purchasing power, yet they would simultaneously increase production costs and make exports more expensive. After all, what government would willfully undermine the only segment of its economy that is currently running smoothly?
The West's attempts to date to respond to this "dual China" have failed. Tariffs have proven unable to curb China's export boom—a direct consequence of weak domestic demand coupled with strong supply.
A united front among democratic industrialized nations would be desirable, yet it remains scarcely realistic.
At the same time, policymakers lack the means to impose their will upon Western corporations. These companies perceive new competitors emerging within the "fast China"—rivals they simply cannot afford to ignore.
Furthermore, on the political level—and certainly since Davos—it has become abundantly clear to the Western middle powers what it truly entails to turn away from one major power (namely, China): it almost inevitably increases their dependence on the other—the USA.” [1]
1. Der Westen ringt mit China. Frankfurter Allgemeine Zeitung; Frankfurt. 27 Jan 2026: 15. Von Gustav Theile
