Latest Data: A Stark Contrast of 'One Decline and One Prosperity' in Cross-Strait Economies

Among Taiwan's various outlying islands, Kinmen, Matsu, and Dongsha hold important positions in defence. (Google Maps/Dajiyuan illustration)

[People News] The Chinese Communist Party (CCP) recently announced that the economic growth rate for the second quarter has slowed to 4.3%, which is lower than the 5% increase recorded in the first quarter of this year and also below economists' forecast of 4.5% growth. In contrast, Taiwan has shared positive news, with President Lai Ching-te announcing that Taiwan is expected to rank among the world's top 20 economies next year. This creates a stark contrast of 'one decline and one prosperity' between the two sides of the Taiwan Strait.

On July 15, the State Council Information Office of China held a press conference regarding the national economic performance in the first half of 2026, stating that China's GDP in the first half of the year exceeded 69 trillion yuan. The economic growth rate for China in the second quarter (April to June) has slowed to 4.3%, down from 5% in the first quarter of this year.

Additionally, in the first half of this year, national fixed asset investment (excluding rural households) reached 22.637 trillion yuan, reflecting a year-on-year decrease of 5.7%.

The national urban surveyed unemployment rate in June stood at 5.0%, which is better than the market expectation of 5.1%.

In June, housing prices in 70 cities continued to decline.

On July 15, the National Bureau of Statistics of China released data on the changes in sales prices of commercial residential properties in 70 large and medium-sized cities for June 2026.

Data indicates that in the new housing sector, the sales prices of newly built commercial residential properties in first-tier cities fell by 1.3% year-on-year. Specifically, Beijing, Guangzhou, and Shenzhen saw declines of 2.1%, 2.6%, and 3.6%, respectively, while Shanghai experienced a price increase of 3.1%. In second-tier cities, the sales prices of newly built commercial residential properties decreased by 3.1%, a reduction of 0.1 percentage points. Third-tier cities also saw a decline in sales prices of newly built commercial residential properties by 4.2%, consistent with the previous month.

The second-hand housing market continues to "exchange price for volume."

The decline in second-hand housing prices, which more accurately reflects the trends in the real estate market compared to new housing prices, is even more pronounced.

In June, the sales prices of second-hand residential properties in first-tier cities in China dropped by 4.9% year-on-year, with Beijing, Shanghai, Guangzhou, and Shenzhen recording declines of 5.5%, 3.2%, 6.1%, and 4.7%, respectively. In second- and third-tier cities, the sales prices of second-hand residential properties fell by 5.4% and 6.0% year-on-year, with the declines narrowing by 0.3 and 0.2 percentage points, respectively.

In the real estate market, the concept of "exchange price for volume" is a well-known economic phenomenon, which can be summarized as: "using a decrease in prices to stimulate an increase in transaction volume." This is akin to businesses conducting "clearance sales" to attract customers and boost sales.

So, why is there a persistent large-scale "exchange price for volume" phenomenon in China's second-hand housing market at present?

Firstly, the previously held belief by authorities that "housing prices will continue to rise" has completely collapsed, and this narrative is no longer credible. Nowadays, purchasing a home has reverted to its "self-occupation" nature, and buyers are reluctant to take over properties at high prices.

Secondly, many young people and members of the middle class are facing salary cuts and the risk of unemployment (as previously mentioned, the challenges of job hunting), which has created an urgent need for them to liquidate their excess properties to ease mortgage pressure or to build up cash reserves. This 'urgent sale' mentality has led them to be willing to actively lower their prices.

Furthermore, while the government has gradually rolled out a series of policies, such as lifting purchase restrictions, reducing down payment ratios, and lowering loan interest rates, these measures can only attract a portion of the rigid demand (first-time buyers) into the market. However, these first-time buyers have limited budgets and are only willing to make a purchase when housing prices 'drop to the right level,' which further reinforces the principle that 'only lower prices can lead to transactions.'

The ongoing economic slowdown and the persistent decline in the real estate sector have resulted in the international community maintaining a negative outlook on China's economy.

On July 14, Bloomberg noted that the slowdown in China's economy reflects ongoing weakness in consumer spending, a sluggish real estate market, and a decline in investment outside of policy-supported sectors such as high-tech manufacturing. On a quarter-on-quarter basis, the economic growth rate for the second quarter is expected to slow to 0.9%, marking the lowest level since 2023. It is estimated that fixed asset investment in China will decline by 5% year-on-year in the first half of this year, setting a new low since the pandemic in 2020.

However, despite the economic downturn in recent years, the Chinese Communist Party has consistently emphasized a narrative of 'economic optimism,' while external observers have continued to question the authenticity of its economic data.

This month, the prominent Chinese economist Gao Shanwen, who recently passed away, had frequently raised concerns about the current state of China's economy. In a speech on December 12, 2024, Gao stated, 'We cannot ascertain the true figures for China's (economic) growth. Personally, I estimate that over the past two to three years, the actual average growth rate of Gross Domestic Product (GDP) may be around 2%, despite the official figure being close to 5%.'

Lai Ching-te: Taiwan is projected to enter the world's top 20 economies next year.

On the other hand, Lai Ching-te, the President of the Republic of China, announced positive news on July 2, indicating that Taiwan's economic growth rate is on the rise, and it is anticipated that Taiwan will break into the world's top 20 economies next year. In a video address for the 55th anniversary of the 'Taiwanese Summer Conference in the Eastern United States' on the evening of July 2, President Lai reflected on how 30 years ago, the people of Taiwan, undaunted by missile threats from the Chinese Communist Party, achieved a voter turnout exceeding 76% in their first direct presidential election. The progress of Taiwan's democracy, freedom, and economic prosperity over the past three decades is a testament to the collective efforts of Taiwanese people both domestically and abroad.

Lai Ching-te noted that Taiwan currently ranks second in Asia for democracy and freedom indices and first globally for healthcare. 'This year, Taiwan ranks fourth in the global competitiveness index. Our economic growth rate continues to rise, and we expect to enter the world's top 20 economies next year.'

Lai Ching-te emphasized, 'Looking ahead, we will continue to capitalize on Taiwan's strengths in artificial intelligence and semiconductors, enhance collaboration with democratic nations, bolster economic resilience, and protect democracy, peace, and prosperity in Taiwan and the region.'

Numerous international economic think tanks, geopolitical scholars, and local economic experts in Taiwan have engaged in in-depth comparative analyses of 'China's political taboos and economic challenges' alongside 'the current state and future prospects of Taiwan's economy'.

Drawing from discussions by the UK think tank CEBR (Centre for Economics and Business Research), the Chung-Hua Institution for Economic Research (CIER) in Taiwan, the Taiwan Institute of Economic Research (TIER), and various economic experts (including Xie Jinhe and independent scholars abroad), a stark contrast emerges in the economic conditions across the Taiwan Strait, marked by 'one thriving and one declining'.

Experts express optimism regarding 'the current state and future prospects of Taiwan's economy'.

International think tanks and experts have highly rated Taiwan's economic situation and maintain an optimistic outlook for its future, even forecasting that Taiwan will officially join the ranks of the world's top 20 economies by 2026.

The esteemed UK think tank CEBR had previously predicted in its 'World Economic Rankings' that Taiwan would surpass countries like Turkey or Switzerland by 2026, elevating its status to the 20th largest economy globally.

In this context, economic expert Xie Jinhe has analyzed and noted that Taiwan has already established itself as the 21st or 22nd largest economy in terms of GDP value. Furthermore, when considering 'Purchasing Power Parity (PPP)' and the significant influence of the high-tech supply chain, Taiwan's actual role in international trade is already on par with that of the top 20 countries.

By successfully decoupling from China, Taiwan is charting a new path towards autonomy.

According to data from Taiwan's Ministry of Economic Affairs and the Directorate-General of Budget, Accounting and Statistics, Taiwan's trade structure has undergone a significant transformation. The share of Taiwan's exports to China (including Hong Kong and Macau) has dramatically decreased from 40.1% in 2016 to a historic low of 26.6% by the end of 2025.

Capital and semiconductor supply chains are rapidly shifting to trusted alliances such as the United States, Japan, the European Union, and Southeast Asia (under the New Southbound Policy). This shift indicates that Taiwan's economic transformation, characterized by 'not needing to rely on China,' has achieved substantial success.

Strong Economic Growth Momentum for Taiwan in 2026

Thanks to the global AI (artificial intelligence) boom, high-end chip packaging, and increasing demand for high-performance computing, both Taiwan's Chung-Hua Institution for Economic Research and the International Monetary Fund (IMF) forecast that Taiwan's economic outlook will remain robust in 2026. With the backing of five major trusted industries and progress in Taiwan-U.S. equivalent trade negotiations (such as breakthroughs in avoiding double taxation agreements), Taiwan's real competitiveness is at a historical high.

Experts Analyze 'China's Economic Taboos and Quagmire'

In contrast to Taiwan, many scholars and analysts express concerns about China's economic future, highlighting that the Chinese Communist Party's 'three major systemic political taboos' are becoming constraints that hinder its economic growth.

Taboo One: Questioning the Official 'Chorus of Optimism' is Forbidden

In China, any public report that presents objective economic research, such as 'China's economic downturn,' 'rising unemployment rates,' or 'foreign capital withdrawal,' is often labeled as a 'malicious smear' or 'national security threat.'

Overseas economists have highlighted that this political taboo has resulted in a lack of authentic data feedback in policy-making. When officials only report positive news and refrain from discussing negative developments, the government is unable to effectively tackle issues such as local debt crises, unfinished real estate projects, and the rising youth unemployment rate. Instead, it resorts to abstract slogans like expanding deficits and 'new quality productivity' to mask the reality.

Taboo Two: Reluctance to Directly Implement 'Helicopter Money' for Citizens

Confronted with a severe lack of consumer confidence and internal demand, the senior leadership of the Communist Party of China has long regarded 'distributing cash and enhancing welfare for the lower class' as a Western welfare taboo that 'encourages laziness'. Consequently, the official stance of the Communist Party favors subsidizing industry over supporting people's livelihoods.

According to analyses by Bloomberg and several foreign investment banks, China's GDP growth rate is projected to continue its decline, reaching around 4.5% by 2026. The root causes of this slowdown are 'overcapacity' and 'weak internal demand'. The Communist Party opts to invest further in industrial manufacturing (such as electric vehicles and lithium batteries) rather than directly subsidizing living standards or increasing citizens' incomes. This approach results in its production capacity being forced to engage in harmful dumping abroad (for instance, through the 'Belt and Road Initiative'), which in turn provokes stronger tariff barriers from the global democratic bloc.

Taboo Three: 'Inherent Distrust' of Private Enterprises and Foreign Investment

The Communist Party prioritizes 'national security' over economic development, which has become the dominant political correctness within its ranks, leading to the retreat of private enterprises and a broadening of security concerns.

The Taiwan Mainland Affairs Council, along with several economic think tanks, has issued a warning that the implementation of the Chinese Communist Party's "Anti-Espionage Law" and new regulations poses a risk of "arbitrary enforcement" for foreign investments and Taiwanese businesses operating in China. Under the shadow of political purges and the presence of party committees, private enterprises—particularly in the internet, education and training, and technology sectors—have lost their innovative spirit and willingness to invest. This has effectively stifled the private economy, which has been the most vibrant source of employment over the past few decades.

Following a comprehensive assessment, many geopolitical and economic scholars have drawn a clear conclusion: "The economic destinies of the two sides of the Taiwan Strait have diverged due to political choices."

In recent years, Taiwan has proactively chosen to integrate into a secure supply chain aligned with the democratic camp, successfully capitalizing on the golden age of AI and semiconductors through the principles of freedom, rule of law, and innovation. In contrast, China has become trapped in a systemic vicious cycle characterized by a highly centralized political system, an obsession with security, and a reluctance to implement meaningful structural reforms, leading to a situation where private enterprises are stagnating, foreign capital is withdrawing, youth unemployment is surging, and domestic demand is suffocating.

This shift not only alters the economic landscape of East Asia but also enhances Taiwan's resilience and its globally strategic "Silicon Shield" capability in the face of political pressures from both sides of the Taiwan Strait.

The term 'Silicon Shield' was initially introduced in 2000 by Craig Addison, a senior technology journalist and commentator from Australia. The central idea of the 'Silicon Shield' theory is that Taiwan holds an irreplaceable position in the global semiconductor industry, particularly in high-end chips. This 'absolute dependence' creates a strong deterrent effect that helps prevent conflict in the Taiwan Strait.
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