President Trump’s Actions Are Forcing China’s Inevitable Economic Collapse – China Can’t Compete with the US
President Trump’s recent actions are forcing China to confront economic realities. After decades of rapid expansion, the Chinese economy is showing serious cracks, and many experts warn it is on the verge of collapse.
For years, analysts have tracked China’s slowing growth. Even before COVID-19, signs of economic strain were clear. Some reports suggested that China’s handling of the pandemic may have been influenced by concerns over its struggling economy. Today, data out of China is widely considered unreliable, and Business Insider reported in October 2023 that the country’s economy is in a precarious state.
For the past thirty years, China experienced a supercycle of expansion. Its manufacturing capacity, domestic consumption, and global influence grew almost uninterrupted. The Chinese Communist Party (CCP) prioritized economic growth above all else, sometimes at the cost of risky policies. These included a massive property bubble, excessive provincial debt, and overreliance on investment without structural reforms. China’s growth fueled not only its own ambitions but global development, drawing American companies and other nations into high-stakes economic bets—many of which have not paid off.
China’s banks are almost certainly insolvent on a balance-sheet basis. In short, on their books they are showing bad loans as good. When the regime runs out of liquidity, they will collapse in the biggest bank crisis in history. https://t.co/15lvDQnI12
— Gordon G. Chang (@GordonGChang) January 10, 2026
Under President Xi Jinping, the CCP has shifted focus from economic development to national security and global power. Wealth is no longer the primary goal; influence and military capability are. This change means China’s government is less likely to intervene to prevent economic downturns. “This isn’t about the economy anymore, it’s all about advanced technology and weaponry,” says Lee Miller, founder of China Beige Book. For American businesses, this signals shrinking demand and unstable supply chains. For policymakers, it means China is more unpredictable. For the global community, it creates a more precarious environment.
China’s real estate sector illustrates the country’s economic fragility. Experts estimate China built housing for 3 billion people, despite having a population of 1.4 billion. Many large developments sit empty. Real estate once made up about a quarter of China’s GDP, inflating the economy artificially. Banks, as noted by China analyst Gordon Chang, are likely insolvent on a balance-sheet basis, masking bad loans as good. When liquidity runs out, China could face a banking crisis of unprecedented scale.
Vanke, once China’s flagship real estate company, is now on the brink of default. Once regarded as a global model of professional management, it highlights the broader fragility of the property sector. Half of China’s top 20 developers from 2021 are now in formal distress, collectively carrying over $1.5 trillion in liabilities. Upstream and downstream contractors face cascading exposure, amplifying the risk of financial collapse.
Trump Is About to Bankrupt China the Soviet Union Way.
He just set a Soviet-Style trap for China.Trump plans to raise U.S. defense spending by 50% to $1.5 trillion in 2027, about 5% of GDP.
This isn’t about Russia.
Russia’s economy can’t keep up.
This is aimed squarely at… pic.twitter.com/852dNBmITa— Ken Cao-The China Crash Chronicle (@Ken_LoveTW) January 10, 2026
Meanwhile, President Trump has announced plans to increase U.S. military spending by 50%, raising the defense budget to $1.5 trillion by 2027—roughly 5% of U.S. GDP. This move directly pressures China, forcing Beijing into a strategic dilemma:
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Match U.S. defense spending → further strain an already fragile economy
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Avoid matching it → fall behind militarily and lose international influence
Either way, China faces economic and strategic setbacks. Analysts compare this dynamic to the Cold War-era arms race that contributed to the collapse of the Soviet Union. Trump’s strategy is applying economic and military pressure simultaneously—potentially forcing radical CCP policies to fail without a single shot being fired.
In effect, President Trump is leveraging America’s economic and military strength to challenge the CCP’s global ambitions, creating a high-stakes test of China’s resilience and decision-making.
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