The year is 2035. China's gleaming skyscrapers are half-empty. Its ghost cities, once symbols of unstoppable growth, are crumbling. And that massive middle class that was supposed to power China's future? They're watching their savings disappear as property values collapse. Sounds crazy, right? After all, this is China we're talking about – the economic miracle that lifted 800 million people out of poverty. The country that built entire cities in months and became the world's factory floor. But here's the thing: China's miracle is running out of magic. And what's happening now isn't just a slowdown – it's the beginning of something much worse. We're watching the world's second-largest economy start a long, painful slide back into poverty. Don't believe it? Let me show you why China's future looks a lot more like its past than anyone wants to admit. Let's start with something that would've seemed impossible just a few years ago: China's real estate market – worth a staggering $50 trillion – is imploding. We're not talking about a minor correction here. This is a full-blown crisis that's erasing decades of wealth creation. Think about this: China has enough empty apartments to house 3 billion people. That's not a typo – three billion. Remember, China's total population is only 1.4 billion. They've literally built enough homes to house an extra China... and then some. But here's where it gets really wild. Meet Zhang Wei, a 35-year-old software engineer from Shenzhen. Back in 2020, he and his wife spent their life savings on a $400,000 apartment. They thought it was a safe investment – after all, Chinese property values had only gone up for decades. Now? That apartment's worth half what they paid. And they're not alone. Across China, middle-class families are watching their wealth evaporate. The numbers are staggering. In just the past two years, Chinese property prices have dropped by 30% in some cities. In places like Dongguan, once a booming tech hub, entire neighborhoods sit empty. Local real estate agents say they haven't made a sale in months. Remember Evergrande? It used to be China's biggest property developer. Now it's defaulted on over $300 billion in debt. But here's the scary part – Evergrande isn't the only one. Country Garden, another massive developer, just defaulted on $187 billion. Together, China's property developers owe more money than the entire GDP of France. And it's not just the big developers. The whole system is built on a house of cards. Chinese families have 70% of their wealth tied up in real estate – compared to just 35% in the United States. When property values fall, they don't just lose a little money – they lose everything. But the real estate crisis isn't just about money. It's about trust. See, Chinese developers had this crazy business model: they'd sell apartments before they were built, using the money from new buyers to finish projects for old buyers. It worked great as long as prices kept rising. But now? There are over 20 million pre-sold apartments that might never get finished. Imagine saving for years, finally buying your dream home, and then... nothing. The construction stops. The developer disappears. Your life savings are gone. That's happening to millions of Chinese families right now. And here's the kicker – local governments are in on this too. They've been funding themselves by selling land to developers. With the property market frozen, their revenue has collapsed. Some cities have cut civil servant salaries. Others can't afford to maintain basic services. But that's just the beginning of China's problems. Because while everyone's been focused on those empty apartments, something even more dangerous has been happening: China's been losing its edge as the world's factory floor. Wait until you hear what's happening to China's manufacturing sector – and why companies are racing to move their factories to places like Vietnam and Mexico. But first, we need to talk about the man who's accelerating China's decline – and how his obsession with control is strangling the world's second-largest economy. Meet Xi Jinping – the leader who's managed to do what decades of Western sanctions couldn't: cripple China's economic future. And he's done it in ways that would make Mao proud. Remember how China used to work? Local officials had the freedom to experiment with policies. Foreign investors were welcomed with open arms. And China's government mostly stayed out of private business. This system wasn't perfect, but it turned China into an economic powerhouse. Xi changed all that. Since taking power, he's rewired China's entire economy around a single principle: control. And I mean control of everything. Take Jack Ma, for example. He built Alibaba into China's Amazon and was worth over $800 billion. Then he made one speech criticizing financial regulators. What happened next? His company's IPO got canceled overnight, regulators launched investigations, and he basically disappeared for months. Alibaba's value? It dropped by $400 billion. That's more than the entire value of Walmart – gone because one businessman spoke out of turn. And it gets worse. In 2023, Xi introduced an "anti-espionage" law so broad that even basic market research could get you arrested. Want to know how many gadgets a factory produces? Could be espionage. Want to survey Chinese consumers about their shopping habits? Might be a national security threat. The results were predictable. Foreign companies started pulling out. In 2023 alone, foreign investment in China dropped by 80%. Just let that sink in - businesses would rather give up on the world's biggest market than deal with Xi's rules. But here's where Xi's really outdone himself: he's concentrated so much power in his own hands that even China's central bank needs his approval for major decisions. Remember how local officials used to have freedom to experiment? Now they're so scared of making mistakes that they won't make any decisions at all. This might sound like just political stuff, but it's having real economic impacts. Let me show you what I mean. In 2023, China reported 5.2% GDP growth. Look at this chart from the World Economic Forum – see how they're projecting growth to slow even further? But even these numbers don't tell the whole story. The government celebrated their 5.2% like it was proof their system was working. Western media outlets ran headlines about China's "robust recovery." Even the IMF praised China's "strong comeback." But here's what they're not telling you: China had to invest 40% of its entire GDP – twice what the US invests – just to get that growth. The numbers are brutal: China dumps $40 into the economy just to get $100 of growth. That's not an economy - that's a money pit. Want to see how crazy this gets? Let's look at just one example: high-speed rail. China's built 40,000 kilometers of high-speed rail lines – more than every other country in the world combined. Sounds impressive, right? But here's the catch: 80% of these lines lose money. The railway system's total debt? $900 billion. Some lines generate so little revenue they can't even afford their electricity bills. Or take the city of Tianjin. They spent $47 billion to build a "world-class" financial center. Today, most of the buildings are empty. The few companies that moved in are mostly state-owned enterprises forced to be there. It's like building a massive shopping mall in the middle of nowhere and then forcing government stores to open there. This isn't just happening in one city. Across China, local governments have built airports that never see planes , stadiums that never host games, and museums that never open. They're building stuff just to boost GDP numbers. Youth unemployment got so bad that China stopped publishing the numbers. It got so bad they just stopped releasing the numbers altogether. And remember those tech companies we talked about? The ones Xi cracked down on? In 2021 alone, his policies destroyed more value than the entire GDP of France. Hundreds of thousands of high-paying tech jobs vanished. Some of China's brightest minds – the people who were supposed to drive innovation and future growth – are now driving delivery bikes or selling street food. Here's why this matters: China's old model of growth – building stuff and exporting cheap goods – isn't working anymore. They need to shift to a consumer-driven economy, like every other developed nation. But Xi's policies are doing the exact opposite. He's scaring away investors, crushing private business, and making it harder for regular Chinese people to make money. But if you think that's bad, wait until you see what's happening to China's local governments. Because while Beijing might be putting on a brave face, China's provinces are facing a financial crisis that makes America's 2008 meltdown look like a minor hiccup. Here's the thing about China's local governments: they've been running a giant pyramid scheme for decades. They'd buy land cheap from farmers, sell it expensive to developers, and use that money to fund everything from schools to subways. In good times, land sales provided up to 40% of their revenue. But remember those property developers we talked about? The ones going bankrupt? Well, they're not buying land anymore. And when nobody's buying land, local governments stop making money. It's that simple. Let me show you how bad this has gotten. In Henan province, civil servants had their salaries cut by 50%. In Guangdong – China's richest province – government workers are being forced to take pay cuts of up to 30%. Some cities can't even afford to keep their streetlights on at night. Take the city of Tianjin again. They're so desperate for money they're selling off government buildings. The local government literally can't afford its own offices anymore. And they're one of the wealthy cities – imagine how bad things are in poorer regions. But here's where it gets really scary. Chinese local governments have racked up $9 trillion in hidden debt. That's bigger than the economies of Japan and Germany combined. They used something called "Local Government Financing Vehicles" – basically, special companies that could borrow money without it showing up on official books. Now these LGFVs, as they're called, are starting to default. In 2023, a financing vehicle in Yunnan province missed a payment on its bonds. It was the first default of its kind in China's history. But it won't be the last. Remember those basic services governments are supposed to provide? Schools, hospitals, road maintenance? Local governments are cutting back on all of that. And it's creating a dangerous feedback loop. When local governments cut spending, people lose jobs. When people lose jobs, they stop buying houses.When nobody buys houses, property prices fall more. When property prices fall, local governments make even less money from land sales. And round and round we go. But here's the real kicker – China's central government can't just bail everyone out. They've got their own problems. Between Covid spending, military buildups, and trying to prop up the economy, Beijing's coffers aren't as full as they used to be. You might be thinking – okay, but China still makes everything, right? They're still the world's factory floor. Well, about that... Because what's happening in China's manufacturing sector might be the biggest sign yet that China's heading back to poverty Remember when "Made in China" was on everything you owned? Those days are ending. Let me show you why. Take Apple. They've been making iPhones in China since 2007. But in 2023, something remarkable happened – they started moving production to India. Not just a little bit, either. By 2025, 25% of all iPhones will be made in India. That's a $50 billion shift away from China. And Apple isn't alone. Samsung? They've already left, moving their factories to Vietnam. Nike? They're making more shoes in Vietnam than China now. Even Chinese companies are getting out. BYD, China's biggest electric car maker, is building factories in Mexico and Thailand. The numbers are staggering. In 2023 alone, foreign companies announced 378 major factory relocations out of China. Vietnam's exports to the US have tripled since 2018. Mexico's manufacturing sector is growing at its fastest rate in decades. Meanwhile, China's share of global exports has dropped for the first time in 40 years. But why is this happening? Well, it's not just one thing. It's a perfect storm. First, Chinese workers aren't cheap anymore. Average factory wages have tripled in the last decade. A factory worker in Vietnam costs half as much. In India, it's even less. Remember how China got rich by being the world's low-cost manufacturer? That advantage is gone. Second, Xi's policies have scared companies away. Remember that anti-espionage law we talked about? Well, imagine trying to run a factory when checking your own production numbers might be considered spying. Companies are tired of dealing with it. Third, China's population is aging fast. The number of working-age people in China has dropped by 40 million since 2012. That's like losing the entire workforce of Spain. And it's getting worse – China's workforce is shrinking by 3 million people every year. But here's what really keeps manufacturing executives up at night: the growing tension between China and the West. Companies learned a hard lesson during Covid – depending too much on China is risky. Now, with talk of trade wars and sanctions, they're not taking chances. Look at what happened to China's semiconductor industry. In 2022, the US banned the sale of advanced chip-making equipment to China. Overnight, China's plans to dominate the semiconductor industry were set back by years. Their most advanced chips are now three generations behind Taiwan's. The impact on Chinese workers has been devastating. In Dongguan, once known as "the world's factory," thousands of factories have closed. The city's population has dropped by 10% as workers leave to find jobs elsewhere. Similar stories are playing out across China's manufacturing belt. And this isn't just about factory jobs. It's about the entire ecosystem of businesses that grew up around manufacturing. The restaurants that fed workers. The shops that sold them goods. The apartments they rented. All of that is starting to collapse. But if you think this manufacturing exodus is bad, wait until you hear about China's demographic nightmare. Because while factories can move back someday, China's population problem is about to make poverty inevitable. And when I say inevitable, I mean it's already happening. Here's a number that should terrify Xi Jinping: for every 17 people who die in China today, only 10 babies are being born. China's population isn't just shrinking, it's collapsing. In 2023 alone, China lost 2 million people. That's like losing the entire population of Slovenia in just one year. But it gets worse. Much worse. By 2035 – that's just 11 years from now – one in three Chinese people will be over 60. That means 400 million elderly people who need pensions, healthcare, and support. For comparison, that's more senior citizens than the entire population of the United States. "But wait," you might be thinking, "don't they have young people to support the elderly?" Well, that's where things get really interesting – and by interesting, I mean catastrophic. Remember that "one-child policy" China had for decades? Well, they're paying the price now. A typical family structure in China looks like this: two parents, four grandparents, and just one child. They call them the "4-2-1 families." That one child is supposed to support six older people. It's mathematically impossible. And those young people? They're struggling. Let me show you something fascinating – and by fascinating, I mean terrifying. This graph tells the story better than I ever could. See that sharp line going up? That's China's urban youth unemployment rate. It hit a staggering 21.3% in June 2023. And then... the line just stops. Why? Because China simply stopped publishing the numbers. They claimed they needed to "improve their statistical methodology." Right. More like they needed to figure out how to make terrible numbers look less terrible. Independent estimates suggest the real rate is now closer to 30%. Even after they resumed reporting with their "new methodology" in December 2023, they somehow claimed unemployment had magically dropped to 14.9%. But here's the thing – they changed who counts as "unemployed youth." Convenient, isn't it? Take Liu Ming, a 24-year-old engineering graduate in Shanghai. He's been looking for work for eight months. His parents spent their savings on his education, hoping he'd support them in retirement. Instead, he's delivering food on an electric scooter, making barely enough to support himself. China's pension system is already cracking under the pressure. In 2022, fourteen provinces reported pension shortfalls. By 2035, China's pension system will need an extra $300 billion every year just to stay afloat. That's more than China's entire military budget. But here's where demography becomes destiny. Remember how China got rich? Cheap labor. Lots of young workers willing to work in factories for low wages. In the 1980s, eight working-age Chinese supported each retiree. Today, it's four. By 2035, it'll be two. That's not an economy that can support itself, let alone compete globally. And China can't immigrate its way out of this problem. Unlike America, which can attract talented people from around the world, China's strict controls and growing xenophobia make it an unattractive destination for immigrants. Instead, China's losing its best and brightest. In 2023, applications for emigration hit record highs. The wealthy are sending their kids abroad and moving their money with them. It's a brain drain and a capital drain happening at the same time. Think this is just a future problem? Think again. Because what's happening to China's social contract right now might be the biggest sign yet that poverty isn't just coming – it's already here. See, China's government had a deal with its people. It went something like this: "Give up political freedom, get economic prosperity in return." For forty years, that deal worked. People got richer. Lives got better. Everyone was happy – or at least happy enough. But now? That deal is falling apart faster than a Chinese apartment building. Remember Zhang Wei, our software engineer from earlier? His parents lived through real poverty in the 1970s. They accepted authoritarian rule because their lives kept improving. Zhang accepted it because he thought he'd do even better than his parents. Instead, he's watching his property value collapse. His tech sector job isn't secure. His savings are worth less every day as the yuan weakens. And now he's wondering – what exactly is he giving up his freedom for? He's not alone. Across China, people are asking the same question. Young people call it "lying flat" – giving up on the rat race because they can't win anyway. They're refusing to buy homes, have kids, or work overtime. Some are even refusing to work at all. The numbers tell the story. China's manufacturing output is shrinking. Foreign investment is fleeing. The property market is in freefall. And consumer confidence? It's hit historic lows. Marriage rates have plunged 60% in the last decade. Birth rates have collapsed. People aren't just worried about the future – they're giving up on it. And Xi Jinping knows it. That's why he's doubling down on control. More surveillance. More censorship. More nationalism. He's trying to replace the economic dream with a political one – "the great rejuvenation of the Chinese nation." But you can't eat nationalism. You can't live in it. You can't save it for retirement. This is how China becomes poor again. Not with a bang, but with a whimper. Property values fall. Factories leave. Young people give up. Old people run out of savings. Local governments can't provide services. The middle class disappears. It's already happening. In 2023, the number of Chinese billionaires dropped by more than half. The middle class is shrinking for the first time since reforms began. Rural parents are pulling kids out of school because they can't afford tuition. This isn't just a crisis – it's the end of an era. The Chinese miracle is over. The economic model that lifted 800 million people out of poverty? It's broken. And there's no fixing it. Think about what that means for a second. The world's second-largest economy, home to 1.4 billion people, is sliding back into poverty. Not because of war. Not because of natural disasters. But because the very things that made China rich are now making it poor. The real estate bubble that created wealth is now destroying it. The demographic dividend that powered growth has turned into a demographic disaster. The authoritarian system that enabled rapid development is now strangling innovation. So what happens next? Well, that's where things get really interesting – and scary. Because China's not going to get poor alone. When the world's second-largest economy tanks, everyone feels it. Those supply chains you rely on? They're going to break. That cheap stuff at Walmart? It's going to get expensive. Those Treasury bonds China owns? They might have to sell them. Thanks for watching. Don't forget to like and subscribe for more deep dives into the stories shaping our world.