How can we assess whether China’s economy is truly recovering? According to a scholar, the recent rise in A-shares may signal genuine economic revival, but a deeper look requires examining three decisive markers.
**First, keep an eye on private investment.**
The total capital in a market determines its prosperity. However, real momentum comes not from printing money but from endogenous growth. Private investment reflects the confidence of rational market players—their instincts are unmatched. If the corporate sector as a whole is not profitable in the wealth distribution, private investment will decline. Even if GDP grows, it may only be sustained by increasing debt, not a sign of genuine recovery. Over the past decade, the sharp drop in private investment growth indicates a long-term assessment of China’s business environment. Private capital is honest, greedy, and smart.
**Second, focus on youth unemployment.**
Why not use the overall unemployment rate? Because it is ambiguous—over 200 million people are in flexible employment; migrant workers in cities are counted as employed, but those returning to rural areas are not considered unemployed. The youth unemployment rate is relatively clearer, though its measurement has changed. When it peaked at 21.6%, the statistical method was adjusted and sampling scope altered, losing international comparability. In the first quarter of 2026, China’s youth unemployment rate was 16.4%, while the U.S. was 8.9% (using broader definitions). For a fair comparison, look at the trend: 15.6% in 2024, 16.7% in 2025—no improvement. The full employment of college graduates represents the “engineer dividend,” a core indicator. Its weakness indirectly reflects enterprises’ reluctance to expand their balance sheets.
**Third, assess institutional costs.**
Economic efficiency is paramount. In great power competition—like the U.S.-Soviet rivalry—efficiency decides the winner over the long run. Institutional costs are inversely related to efficiency and directly distort the distribution structure. People often blame low incomes on enterprises, but this is only part of the picture. If the government takes a larger share, it squeezes corporate profits, which then squeeze household incomes, creating insufficient demand. Chinese enterprises are efficient in execution but have very low value efficiency. In 2025, total corporate profits in China reached 7.40 trillion yuan, while U.S. corporate profits were 20.52 trillion yuan (nearly three times higher). This huge gap is not reflected in GDP. Meanwhile, among the global top 30 most profitable companies, no Chinese mainland company appears except for five banks; the U.S. has only one bank and 13 industrial firms. In 2025, Chinese banks earned 2.40 trillion yuan in profits, while 57 million other enterprises collectively earned just 3.08 times that. In contrast, U.S. banks earned 2.13 trillion yuan (in comparable terms), and non-bank enterprises earned 9.63 times the banks’ profits. This structural disparity highlights the core issue of distribution: the public sector’s oversized role.
Can these three indicators see fundamental improvement in 2026? As the saying goes, this year will be full of both opportunities and challenges.