The article from Macrobusiness.com.au titled "The Great Chinese Depression Deepens" (dated 26 January 2026) paints a dire picture of China's economy, asserting that a full-blown depression is underway, characterised by "catastrophic" property sales in the new year and a secondary market resembling a frantic "run for the exits." This isn't the first time the site has used suchlanguage; a similar piece from July 2025 described China as "mired in a depression," led by a property crash and barely growing economy. But is the claim of a "Great Depression" in China accurate? Let's break it down with recent data, then explore why even a partial validation of this slowdown would be "depressing" for "Big Australia"— a term often used to describe Australia's high-immigration, population-driven growth model.

Historically, a "Great Depression" evokes the 1930s global crisis: massive GDP contractions (e.g., U.S. GDP fell 30%), skyrocketing unemployment (25% in the U.S.), deflationary spirals, and widespread bank failures. By that standard, China's current situation doesn't qualify. Instead, it's experiencing a prolonged slowdown with structural challenges, more akin to Japan's "lost decades" of stagnation since the 1990s. Here's the evidence:

GDP Growth: Official figures show China's economy expanded by 5% in 2025, hitting the government's target, but growth slowed to 4.5% in Q4 2025 — the weakest in nearly three years. For 2026, projections range from 4.3% to 4.8%, with consensus around 4.5% from economists polled by Reuters and Nikkei. Optimists like Goldman Sachs cite surging exports (up 6.1% in the first nine months of 2025) as a buffer. Pessimists, such as Rhodium Group, argue actual 2025 growth was under 3%, with 2026 needing major stimulus to exceed 2% if domestic demand doesn't rebound. This is deceleration, not contraction — China's still growing, albeit below its pre-COVID averages of 6-7%.

Property Market: This is the core of the "depression" narrative, and it's genuinely troubled. Falling apartment prices have wiped out savings for millions, with the sector in a multi-year bust since the 2021 Evergrande collapse. New data shows weak demand persisting into 2026, aligning with Microbusiness's "catastrophic" sales claim. However, government interventions — like relaxed buying restrictions and subsidies aim to stabilise it, though effectiveness is debated.

Unemployment and Consumer Spending: Youth unemployment hovers around 17-20% (official figures fluctuate), contributing to weak domestic consumption. Retail sales and industrial output slowed in late 2025, signalling deflationary risks (inflation at 0.7% projected for 2026). Consumers are saving more amid property losses and job insecurity, but no mass unemployment like in a true depression.

Exports and Trade: Exports offset domestic weaknesses in 2025, driving a record trade surplus. However, global headwinds like U.S. tariffs and slowing demand in Europe could cap this in 2026.

Stimulus Efforts: Beijing has rolled out measures, including interest rate cuts by the People's Bank of China and fiscal packages, with more expected in 2026 to hit a 4.5-5% growth target. Critics argue these are insufficient to address debt (local government debt exceeds 100% of GDP) and demographic issues (aging population, low birth rates).

In summary, the "Great Chinese Depression" label is hyperbolic. China's facing a "middle-income trap" with deflation, debt, and demographics, but positive growth and export strength prevent it from being a full depression. Macrobusiness.co.au amplifies the gloom to underscore risks, and while the slowdown is real, independent analyses like those from the World Bank or IMF project modest recovery if stimulus lands. That said, if the deepening trends in property and consumption persist without rebound, it could evolve into something more severe.

Even without a full depression, China's slowdown spells trouble for Australia, whose economy is deeply intertwined with its largest trading partner. Australia exports over 30% of its goods to China. A weaker China means reduced demand for commodities, falling prices, and ripple effects across mining, budgets, and growth strategies. Here's why it's particularly "depressing" in the context of "Big Australia"— a term coinedfor policies relying on mass immigration (net 400,000+ annually) to inflate GDP via population growth, rather than productivity gains.

Commodity Crunch and Mining Woes: Iron ore prices have already dipped to lows not seen since 2023, driven by China's steel output slowdown (down in mid-2025). Projections for 2026 show oversupply, with prices potentially averaging $90-100/ton, down from peaks of $140+. This hammers giants like BHP and Rio Tinto, which derive 80-90% of earnings from iron ore sales to China. Job losses in mining regions (e.g., Western Australia) could follow, and federal royalties/taxes shrink, pressuring budgets. Broader commodities like coal and LNG face similar risks amid China's green transition.

Trade Tensions Amplify the Pain: Recent frictions — China demanding lower iron ore prices, import bans on some Aussie products, and threats of trade war — exacerbate the slowdown's impact. Australia's trade surplus with China (A$100B+ annually) could erode, weakening the AUD and raising import costs.

The "Big Australia" Trap: Without China-fuelled commodity booms, Australia's growth model looks shaky. "Big Australia" pushes for 1-2% annual population growth via immigration to sustain housing, retail, and services, but critics argue it masks stagnant productivity (Australia's productivity growth lags OECD averages). A China slump reduces export revenues, forcing more reliance on immigration-driven demand, which strains infrastructure, housing affordability (prices already at crisis levels in capital cities and elsewhere), and wages. Macrobusiness often warns this creates a "ponzi economy" — unsustainable without external booms. If China's "depression" deepens, it could trigger Australian recession risks, with McKinsey noting the need for productivity reforms to avoid stalling. This hits close: mining royalties fund state projects, and a weaker AUD inflates costs amid global uncertainties.

In essence, while the "Great Chinese Depression" is overstated, the underlying slowdown is real and concerning. For Australia, it's "depressing" because it exposes over-reliance on China, potentially leading to lower living standards, budget deficits, and intensified debates over immigration versus genuine economic reform. Diversification — boosting tech, renewables, and non-China trade — could mitigate this, but as of early 2026, the risks loom large. Australia in its manic desire for "Asianisation," has put all of its eggs in the one China basket.

https://www.macrobusiness.com.au/2026/01/the-great-chinese-depression-deepens/