At the Boao Forum for Asia on March 26, 2026, Zhao Leji, Chairman of the Standing Committee of the National People’s Congress of the Chinese Communist Party (CCP), delivered a keynote speech emphasizing the importance of “grasping the correct direction” and signaling “economic stability and sustained openness” to the outside world. However, the gap between official rhetoric and the realities faced by frontline industry operators in the manufacturing sector is becoming increasingly apparent, raising doubts about the true state of the Chinese economy.
This year marks the 25th anniversary of the Boao Asian Forum. Since Xi Jinping came to power, important milestones such as the 5th and 10th anniversaries have usually been attended by the highest or second highest leaders of the CCP. However, this time the keynote speech was not delivered by the CCP leader or premier, but by the third-ranking figure, Zhao Leji, which was seen by the outside world as an important signal of a “downgraded” forum.
Both foreign media and scholars point out that Boao, once considered the “Davos of Asia,” has visibly lost its past luster in recent years. According to Reuters, attendees observed that controversial issues were not touched upon, and debates were no longer as active as before. Stephen Roach, former Chairman of Morgan Stanley Asia and an American economist, bluntly stated about last week’s “China Development High-Level Forum” that it has “lost its soul.”
Bloomberg quoted a Western diplomat describing the atmosphere at Boao as “out of touch” with reality. While officials were discussing innovation, cooperation, and regional visions in breakout forums, the energy transport risks in the Hormuz Strait were directly impacting the entire Asian supply chain.
Mr. Xu, the owner of a TPE (Thermoplastic Elastomer) plastic factory in Dongguan, Guangdong Province, expressed his concerns about rising costs due to raw material price hikes, noting that not raising prices would result in significant losses for his business. He explained the detailed cost structure of his products and how the increases in raw material prices are affecting their bottom line.
In comparison to the “economic stability” message conveyed at the Boao Forum, the reality at the frontline of Chinese manufacturing is starkly different.
Mr. Wang, a chemical raw material trader from Shandong, noted that various industries like silicon, lithium, petrochemicals, and coal chemicals are all experiencing price increases. However, he emphasized that rising prices do not equate to economic prosperity if downstream demand remains weak.
Ms. Ye, the owner of a small synthetic fiber fabric factory in Jiangsu, lamented the continuous increase in raw material prices and the challenges she faces in passing on the costs to customers while having to contend with extended payment terms.
As tensions escalate between the US and Iran, impacting the Chinese industrial supply chain, the CCP leadership has been reluctant to openly discuss the specific economic damages caused by the conflict. Despite Beijing’s strategic oil reserves and investments in renewable energy providing some buffer at a macro level, small and medium enterprises that are the engines of employment are facing direct impacts from rising input costs.
Amid these challenges, scholars like Sun Guoxiang have shared more profound insights into the situation. He highlighted China’s reliance on high-quality raw materials for advanced manufacturing, pointing out the vulnerabilities stemming from geopolitical uncertainties.
Sun further emphasized that the issue is not just about market price fluctuations but is closely tied to Beijing’s strategic alignments and long-standing structural problems that intertwine political leverage, cheap resources, and industrial security within the CCP’s governance.
In contrast to the CCP’s emphasis on the “correct direction” at the Boao Forum, observations from academia and industry indicate that the current challenges facing the Chinese economy are not merely short-term fluctuations but a build-up of structural pressures.
The stark disparity between the official narrative of “stability” and the harsh realities faced by grassroots enterprises underscores the deep-rooted issues within the current economic landscape.