Focus on the New Economy, Not the Old: Why China’s Economic Slowdown Understates Gains

Speaker: Mr. Gerard DiPippo (RAND)

Date: 30 April 2025

Speaker Session Summary

SMA hosted a speaker session with Gerard DiPippo(RAND) as part of its SMA INDOPACOM Speaker Series. 

National headlines about China’s economy have focused on its decelerating economic growth and gross domestic product (GDP). Despite these macroeconomic indicators, China continues to pursue its high-tech ambitions and invest heavily in advanced technologies, such as artificial intelligence (AI) and semiconductors. Mr. DiPippo emphasized that negative macroeconomic trends may obscure China’s microeconomic dominance in key sectors. He stated that the belief that China’s economic prospects are weakening over the long-term is not entirely accurate, noting that the country’s rapid economic growth over several decades was partly the result of its transition from a pre-industrial economy to a modern industrial economy. 

Mr. DiPippo acknowledged that China faces challenges, including rising debt, aging demographics, and deflation. For example, the working-age population as a share of the total population has been declining for over a decade, while household debt continues to increase. However, this debt is primarily internally funded rather than borrowed from foreign sources, with much of it held by Chinese citizens who are indebted to the state. A correction in the housing market, which comprises a large portion of China’s GDP, has also significantly contributed to the current weak macroeconomic trends in China’s economy. 

Another key factor contributing to weakening macroeconomic indicators is China’s ongoing transition from the “old economy,” which relied on traditional industries such as steel, property, and coal, to the “new economy,” characterized by high-tech industries. Mr. DiPippo emphasized that China’s “new economy” is expanding rapidly and achieving dominance in some sectors—such as artificial intelligence—even as sectors of the old economy are contracting. The continued significance of industry and property in China’s economic structure contributes to the perception of broader economic weakness. Mr. DiPippo also noted that the ongoing US–China trade war is compelling both countries to diversify their exports and imports, contributing to economic disruptions on both sides. 

To see more of Mr. DiPippo’s research on China’s economic growth, then please read his article, “Focus on the New Economy, Not the Old: Why China’s Economic Slowdown Understates Gains.” 

Speaker Session Recording

Briefing Materials

Briefing Slides:

RAND Commentary: https://www.rand.org/pubs/commentary/2025/02/focus-on-the-new-economy-not-the-old-why-chinas-economic.html

Biography:  Gerard DiPippo is the acting Associate Director of the RAND China Research Center and a Senior Researcher in RAND’s D.C. office. Prior to joining RAND, DiPippo was the Senior Geo-Economics Analyst at Bloomberg Economics. His research focuses on China’s economy, US-China relations, industrial policy, global supply chains, financial issues, and sanctions. He was previously a Senior Fellow in the Economics Program at the Center for Strategic and International Studies. He served 11 years in the US Intelligence Community, including at the Central Intelligence Agency and as a Deputy National Intelligence Officer for Economics Issues at the National Intelligence Council. DiPippo has a B.A. in economics and philosophy from Dartmouth College.