La Jornada: The progress of the US economy: the fourth

With admiration and Permanent respect to my colleague Enrique Dussel Peters, from the Faculty of Economics of our UNAM, for his pioneering and continuous work on China, let us reflect a little on the great trends in industrial capacity and production in this surprising nation during the past 50 years.

Yes, which in 2025 grew 5 percent. The same one in which – according to the works of the admired Enrique – there are surprising growths and changes. Last year, the added value of its large industrial companies increased almost 6 percent.

They stand out – according to official data and works by Enrique (Dussel Peters, Enrique, 2025) –, for example, “Latin America and the Caribbean-China socioeconomic relations: new triangular relationships and the Mexican case in 2025”, China International Strategy Review. In it he studies Chinese projects in Mexico, within the framework of the dominant integration of Mexico with the United States. Clear examples? Electronics, automobiles, machinery, chemistry and railway, naval and aerospace equipment.

Its exceptional productive, technological and export power is confirmed, but, as in almost all economies in the world – if not all – an increasingly visible contradiction also appears. Production increases, although the capacity to produce appears to grow even more rapidly. In 2021, large industrial companies used 78 percent of their capacity; in 2024, 75 percent, and in 2025, only 74 percent. The implicit idle capacity thus went from 23 to 26 percent. It certainly does not mean that a quarter of the factories are completely stopped. The indicator expresses the distance between effective production and what is technically possible, with the available facilities.

It shows that factories, machinery, infrastructure and technology advance faster than the demand capable of absorbing their production.

The real estate crisis explains part of it. For decades, housing and urban infrastructure absorbed steel, cement, glass, machinery and enormous financial resources. Its weakening left growing idle capacity. But the problem is broader. Provincial governments, banks and companies continue to promote investments in electric vehicles, batteries, solar panels, electronics, machinery and new technologies. Thus, China faces a particular form of overaccumulation. It is not yet European industrial stagnation. Nor the slow US manufacturing recovery. It is an expansive overaccumulation. Production continues to grow, but potential capacity grows even more. Hence the importance of exports and their expansionary spirit in Latin America. When domestic demand does not absorb everything produced, companies seek to place automobiles, steel, machinery, batteries, chemicals and electrical equipment on the world market.

The price reduction sustains its competitiveness, but compresses margins and causes protectionism in the United States and Europe. In 2025, industrial producer prices decreased 3 percent, while retail sales grew 4 percent. Industrial production of 6 percent, less dynamic consumption and falling prices clearly describe the tension between productive capacity and domestic demand (National Bureau of Statistics of China, 2026; International Monetary Fund, People’s Republic of China: 2025 article IV consultation, February 2026, OECD; OECD Economic Outlook, volume 2026 issue 1: China, June 2026).

The near future will depend on a decision. China can continue to expand capacity, support investment and transfer the pressure of its surpluses abroad. Or it can reorganize its economy to more quickly raise household consumption, wages, social protection and public services. The first path would prolong commercial and technological competition, deflationary pressure, idle capacity and international conflicts. The second would allow a greater proportion of China’s extraordinary productivity to be translated into domestic well-being. A collapse does not seem likely. According to various specialists, China has state financial capacity, infrastructure, technology and extensive policy instruments. A slowdown does seem likely. The IMF and OECD forecast growth close to 5 percent in 2026, followed by increasingly lower growth. At least for now.

The main problem is not simply how much China will grow, it is how it will resolve the contradiction between its enormous capacity to produce and the insufficient consumption capacity of its population. This contradiction is not exclusive to China either. It appears, in different forms, in the United States and Europe, and expresses a structural difficulty. You have to study it carefully. And in that framework the alternatives for our Mexico, compared to this enormous and admired country. Really.

NB Great colleague worldwide specialist in hydroelectric plants, our pride, Humberto Marengo, distinguished civil engineer from CFE, from Conagua, from Mexico, from the world, has left us. A huge hug to your family. Amen.

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