China's recent military parade showcased its military strength while underscoring the country's ongoing economic challenges. President Xi Jinping, flanked by allies from Russia and North Korea, issued a stark ultimatum to an unnamed adversary, stating, "Today, humanity is again faced with the choice of peace or war, dialogue or confrontation, win-win or zero-sum." The parade, which celebrated China's victory over Japan in World War II, featured new nuclear missiles, drones, and lasers, drawing attention from a global audience.

In contrast, the United States held a military parade in June that some observers viewed as a domestic spectacle rather than a global statement. The U.S. event coincided with a period of economic uncertainty, as rising inflation and disappointing job figures raised concerns about a potential slowdown.

China's economy is grappling with significant issues, including a property market slump and rising unemployment. The country is experiencing deflation, with consumer prices declining, which can hinder consumption and investment. This economic downturn has been exacerbated by the trade war with the U.S., which has made it difficult for China to export goods and maintain its economic growth.

The collapse of China Evergrande, once a leading property developer, highlights the severity of the situation. After being removed from the Hong Kong stock exchange, the company left behind $45 billion in debt owed to creditors. Housing prices have been in decline since 2021, returning to levels not seen since 2017, leaving many investors and homeowners in precarious financial situations.

As China's economy struggles, neighboring countries are also feeling the effects. Thailand and the Philippines are experiencing deflation, while India's consumer prices have slowed significantly. The Reserve Bank of Australia has noted that the U.S. tariff war could lead to cheaper imports from China, potentially stabilizing Australian consumer prices.

Despite the challenges, some sectors are seeing growth. Chinese-branded cars have surged in popularity in Australia, with 141,858 sold this year, making China the second-largest source of cars in the country. However, the overall economic outlook remains bleak, with overcapacity in production leading to price cuts and squeezed profit margins.

Youth unemployment in China is particularly concerning, with rates estimated between 14% and 19%. Many young people are struggling to find jobs, leading to record participation rates in neighboring countries as individuals seek work. The economic pressures are forcing more people back into the workforce, but the situation remains dire for many.

As both China and the U.S. navigate their internal challenges, the global economic landscape is shifting. The interplay between these two superpowers will have significant implications for international trade and economic stability.