BWC Member David Lubin, Senior Research Fellow at Chatham House, examines a new term from the People’s Bank of China — “jiegou fenhua,” or “structural divergence” — used to describe an economy running at two speeds: booming manufacturing and exports (China posted a record $125 billion trade surplus in June) alongside deeply depressed household spending and confidence. Lubin traces the split back to Beijing’s 2020 decision to redirect capital from real estate into manufacturing, and argues the resulting export dominance may be less an unintended side effect than a deliberate source of geopolitical leverage, meaning Beijing is likely to keep prioritizing that leverage over household welfare.

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