Communist China’s economic troubles — the consequences of a lack of freedom and the failure of central planning — will be a story to watch in the year ahead. Recent reports featuring, say, falling industrial profits, high youth unemployment, and declining investment offer a corrective to triumphalist predictions in the liberal press of a coming “Chinese Century” or the vindication of President Xi Jinping’s repressive policies in the years ahead.

It’s not our intention here to ignore the fact that China is a formidable economic rival to America. In 2025 the mandarins’ mercantilist methods made the mainland a $1 trillion trade surplus — a reflection of Beijing’s status as de facto workshop to the world. Yet China’s gross domestic product, at some $19 trillion, has yet to overtake America’s $28 trillion economy as the world’s largest. China’s GDP a head, too, is but a fifth of America’s.

Mr. Xi, though, has been pushing economic prosperity as the means to achieve what he calls the “great rejuvenation of the Chinese nation” — plus, too, global dominance. All the more reason, then, to mark the warning signs that lurk beneath the surface of Mr. Xi’s propaganda. These negative developments reflect the fact that, as these columns have warned, “a thriving economy is in the long run incompatible with tyranny.” 

That’s the lens through which to view the news, reported by the Nikkei’s Financial Times, that in November industrial profits on the mainland “fell at their fastest pace in more than a year.” Profits fell some 13 percent over the prior year, following a 5.5 percent drop in October. The FT attributes the setback to the struggle by “Xi Jinping’s economic planners” to “contain the fallout from industrial overcapacity” and “lackluster consumer confidence.”

Looking more broadly at the economy, the FT reports Beijing faces a challenge to “find long-term drivers of strong growth in the wake of the collapse of the debt-fuelled property sector.” China’s real estate sector, the FT adds, “is now entering its fifth year of crisis.” The housing sector’s distress is so severe, Deutsche Welle reports, that the regime at Beijing has ordered “private data providers to stop publishing home sales figures.”

The move, DW cautions, cuts off “one of the few independent windows into the current woes in the real estate market.” Withholding such information is antithetical to the need for information in a free market, and typical of the repressive nature of Mr. Xi’s regime. It’s a reminder of the impossibility of separating economic liberty from political liberty, which are, these columns have said, “the warp and woof of the fabric of freedom.”

It’s telling, too, that investment in China tumbled in November, as the New York Times reports, “propelling the country closer toward its first annual decline” in more than thirty years. Since the late 1980s, China’s economy had been expanding, and “investment in buildings, public works and factories had increased every year.” Yet in November investment fell 11.1 percent over the prior year, the second month in a row of double-digit declines.  

The slowdown is likely to aggravate one of China’s social problems, the high rate of joblessness among the young. The rate exceeds 20 percent, the Corriere Della Sera’s Federico Rampini reports, prompting Mr. Xi to urge recent graduates to “chew on their bitterness” and take jobs below their level of training. Mr. Rampini reminds that in 1989, “frustrated aspirations” led young Chinese “to occupy Tiananmen Square to demand rights and freedom.”