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Defense Secretary Pete Hegseth speaks during a news conference at the Pentagon on June 22, 2025. (Andrew Harnik via Getty Images)
In strategic and military terms, does it matter that the Chinese economy is slowing? Many assume that because of the large size of its economy, Beijing will continue to have enormous resources with which to expand its strategic and military presence in East Asia. Although some analysts have noted that even a 3-4% expansion in a $10 trillion economy is enormous in absolute terms, Hudson Senior Fellow John Lee, an expert in Chinese development, explains that the slowdown will have a disproportionate negative fiscal impact for the Chinese government. Even in the event of a moderate slowdown, it will lead to the worst fiscal outlook in over 35 years.
On November 19th, Dr. Lee gave a presentation examining the origins of the fiscal problem, explaining why conditions will likely worsen under any domestic economic scenario, and describing the potential effect of the slowdown on the PLA’s capacity to project power in the region.
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