07:25 AM EST, 01/02/2025 (MT Newswires) -- When China prioritized economic growth over ideology from the late 1980s onwards, it narrowed the income gap to the advanced economies rapidly, noted Berenberg.

However, after consolidating his hold on power, China's President Xi Jinping has turned away from the pro-growth model, said the bank.

Instead, Xi is subjugating the economy to more central control, steering resources to sectors that he considers crucial to project power beyond China's borders, possibly with the aim of deterring the United States from helping Taiwan in case of a Chinese attack, stated Berenberg.

This compounds the problems stemming from China's real-estate crisis and its adverse demographics, pointed out the bank. With a fertility rate of 1.2 births per woman, China's population looks set to decrease by about 200 million by 2054 according to United Nations projections.

China's share in global gross domestic product has receded from 18.2% in 2021 to 16.6% in 2024. The mounting discrepancies between China's official GDP data and other indicators, such as consumer confidence, and more anecdotal evidence suggest that the latest data overstate the size of the Chinese economy, possibly by some 5% or so, added Berenberg.