A tower crane stands above residential buildings in an urban district in the afternoon light, on January 9, 2026, in Chongqing, China.

Cheng Xin | Getty Images News | Getty Images

BEIJING — China’s push into high-tech industries, including artificial intelligence and robotics, is not sufficient to offset the country’s property slump, leaving the economy more exposed to trade tensions, according to a report by U.S.-based research firm Rhodium Group.

China’s Economic Challenges

From 2023 to 2025, new industries such as artificial intelligence, robotics, and electric cars added just 0.8 percentage points to economic output, while real estate and other traditional sectors saw a combined 6 percentage point decline, the report said. The analysis drew on official Chinese data and industry-specific sources.

The findings come as China seeks to boost technological self-reliance in response to U.S. restrictions. Under a five-year development plan set to kick off in earnest in March, Beijing is doubling down on advanced technologies with state investment and favorable policies.

“China’s growth strategy isn’t going to work,” Logan Wright, partner at Rhodium and a co-author of the report, told CNBC. “They’re not going to achieve their targeted rates of GDP growth based on the policies they have outlined so far.”

Property Sector Weakness

Beijing has targeted annual GDP growth of around 5% in recent years. For China to sustain that pace, new industries would need to expand sevenfold over the next five years to generate the roughly 2 percentage points of annual investment growth required, Rhodium estimated.

That translates to an additional 2.8 trillion yuan in new investment required this year — or 120% more than in 2025. While investment in artificial intelligence or robotics could increase in the next year or two, other emerging industries are unlikely to sustain such rapid growth, the analysts said.

“Electric vehicles have likely already reached their fastest rates of growth, and output in the industry may be slowing in the years ahead,” the Rhodium report said.

Trade Tensions and Job Market

An overemphasis on tech could have broader economic consequences. New industrial sectors may offer higher wages, but they employ far fewer people than traditional industries, the Rhodium analysis found.

Increased factory automation, coupled with China’s already high 30% share of global manufacturing output, could lead to the loss of up to 100 million jobs over the next decade — a displacement that would exceed the total workforce of most developed economies, according to global investment firm KKR.

China’s urban unemployment rate remained above 5% for much of last year, while youth unemployment has been about three times higher.

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Conclusion and Future Outlook

China’s economic imbalance mirrors a similar divergence in the U.S., where AI-linked companies have led stock market gains, while other parts of the economy have struggled.

But many in Beijing argue that the country has longer-term interests at stake. Zhang Jianping, a deputy director at China’s Commerce Ministry, told CNBC last week that the country’s policies are designed to support innovation over multiple years.

For more information, read the full report Here

Smart Tip for Readers

To better understand the impact of China’s economic shifts on global trade, consider tracking key indicators such as GDP growth rates, trade balances, and industry-specific investment trends, and stay informed about policy changes and their potential effects on the global economy.