In a recent analysis article, former US Department of Defense advisor Reuben F. Johnson cited predictions by analysts suggesting that 2026 could be a critical juncture for China, with the possibility of seven major crises erupting simultaneously. According to Johnson’s piece published on the US-based 19FortyFive website, experts forecast that starting from January 2026, China may face deepening and intersecting economic and structural crises. The key indicators include worsening deflationary spirals, long-term stagnation in the real estate market, and increasing financial risks.
The warnings were based on a conclusion reached in late December 2025 by a group of economists and data analysts specializing in studying China’s structural macroeconomic risks, using a cross-sector quantitative indicator framework. These cautionary signals cover seven critical indicator groups:
1. The growing disparity between retirement fund contributions and payments;
2. Decreasing self-sufficiency in local government finances, reduced income from land sales, and mounting pressure from hidden debts;
3. Synchronous reversal in the sales of new homes in major cities, listings of second-hand homes, and inventory digestion;
4. Increasing pressure on small and medium-sized banks, evidenced by rising non-performing loans, tight interbank financing, and delayed redemption of wealth management assets;
5. Continual contraction in industrial profits, output growth, and employment indicators;
6. Accelerated decline in population structure, manifested as decreasing birth rates, a shrinking labor-age population, and a slowdown in preschool enrollment rates;
7. Comprehensive decline in external demand, such as reduced export orders, slower shipments to major markets, decreased electricity consumption in coastal areas, and declining container throughput.
The article highlighted that historically, these seven core indicators rarely deteriorate simultaneously within 12 to 18 months. However, by the second half of 2025, most of these indicators had already breached key early warning thresholds and were deteriorating concurrently, increasing the risk of systemic “disappointment resonance” in China’s finances, demographics, and economic fundamentals.
On January 19th, the National Bureau of Statistics of China released data showing that the country’s birth rate in 2025 was 7.92 million, lower than the 9.54 million in 2024, reaching the lowest level in decades. Additionally, China’s total population has decreased for the fourth consecutive year, with a reduction of 3.39 million people last year, marking the largest decline since the population began decreasing in 2022.
In 2025, China’s real estate market continued to contract, with significant declines in development investment, new home sales area, and sales volume. For instance, real estate development investment amounted to 8.2788 trillion yuan, a 17.2% decrease from the previous year; the sales area of newly constructed commercial buildings decreased by 8.7% year-on-year to 881.01 million square meters; and the sales volume plummeted by 12.6% to 8.3937 trillion yuan. The sales volume of new commercial buildings in China dropped from 18.2 trillion yuan in 2021 to below 10 trillion yuan in 2024, further declining to 8.4 trillion yuan in 2025.
In 2025, China’s land transfer revenue hit a ten-year low. According to official cumulative data from the Ministry of Finance, revenue from the transfer of state-owned land use rights amounted to 2.9119 trillion yuan in the first eleven months of 2025, a 10.7% decrease compared to the previous year, with the deficit expanding over the preceding ten months. The government’s fiscal deficit expanded to 5.66 trillion yuan, increasing by 1.6 trillion yuan from the previous year.
Regarding social security funds, official data indicated that in 2024, social security fund income grew by 5.2%, while expenditures surged by 7%, leading to the first cash flow deficit in six years. Data for the fiscal year 2025 has not been released yet. Furthermore, in 2024, 13 provinces diverted 40.626 billion yuan from urban and rural residents’ pension funds and related livelihood funds to expenses under the “three guarantees” of basic livelihood, wages, and financial obligations.
Data released by the National Bureau of Statistics on November 27, 2025, showed that in the first ten months of the year, the total profit of industrial enterprises above designated size in China reached 5.95029 trillion yuan, a year-on-year growth of 1.9%, a 1.3 percentage point decrease from the 3.2% growth in the January to September period.
While the Chinese Communist regime claimed an unemployment rate of 5.2% in 2025, it is widely believed to involve data falsification. American economist David Huang recently told a publication that the so-called survey unemployment rate is based on questionnaires conducted during working hours, overlooking those who are not employed and not actively seeking work during normal hours. Therefore, this unemployment rate survey may not truly reflect the employment situation.
Although the General Administration of Customs of China recently boasted record-breaking exports and trade surpluses, international balance of payments data released by the State Administration of Foreign Exchange at the end of last year presented a different economic picture. The data revealed that the substantial trade surplus did not translate into a simultaneous increase in forex reserves. Despite the official claim of a $155.9 billion increase in forex reserves by the end of 2025 compared to the previous year, there was a $35.6 billion decrease at the end of 2024.
In a recent provincial and ministerial-level official study session related to the Fourth Plenary Session of the Central Committee of the Chinese Communist Party, party leader Xi Jinping acknowledged that China is in a period of “increased uncertainty and unpredictability.” Observers in Beijing believe that the Chinese Communist regime has reached a turning point as the country’s economy shows signs of overall decay.