WCX: Expert Claims War Hurting China’s Already-Struggling Economy

April 14, 2026

Chris Clonts

As the opening keynote speaker for SAE WCX 2026 in Detroit, China analyst Gordon Chang was direct in his assessment of the Iran war’s effect on China, particularly the closure of the Strait of Hormuz.

“We know that China gets somewhere between 45 to 50% of its imported crude oil through the strait. And that probably is going to drop to about zero. It's already declined substantially. We know this because diesel prices in China skyrocketed immediately after the start of the war,” Chang said. He added that the rise would make driving in China extremely expensive, more so than in other countries. “This war is a disaster for Beijing. Americans will always have gasoline. The Chinese may not.”

Despite that, and his bleak assessment of the country’s economy, Chang said that the Chinese auto industry is making the best cars in the world. However, even those quality vehicles have limited global growth prospects due to the protectionist policies of the United States, the EU, Japan and other countries. The fact that China flooded its automotive industry with subsidies is also limiting its growth potential and has led to what Chang and economists have called “involution,” or the trend of intense, cutthroat competition resulting in diminishing returns and stagnation, often described as a "race to the bottom.” It can signify overcapacity, which China is experiencing in its EV sector.

Christian Thiele, SAE’s director of global ground vehicle standards, joined Chang for a few questions after his main speech. (Chris Clonts)

The fierce competition hurts companies that aren’t as big as BYD and CATL. “Nobody wants to buy a car from a company that may not exist,” he said.

Chang said that even in countries that are allowing Chinese cars to be imported, they’re running into other problems, such as in Brazil, where auto giant BYD has been accused by the Ministry of Labor of employing people in “degrading and slavery-like” conditions. Chang added that China’s few global partnerships, such as Ford’s with CATL for building batteries and Geely’s Polestar 3 factory in Ridgeville, S.C., aren’t all that significant.

Chang is the author of the recently published “Plan Red: China’s Project to Destroy America and The Coming Collapse of China.” He also authored “The Great U.S.-China Tech War” and “China is Going to War.” He worked as a lawyer for two decades in China, first in Hong Kong and then in Shanghai. He’s a frequent contributor to Fox News, CNN and CNBC, writes a column for Newsweek and contributes to The Hill and other publications.

Economic troubles

And while many believe that China is an extremely powerful and looming global threat, he says the country’s economic future is bleak and that “there is no solution in sight as long as [Chinese President] Xi Jinping rules the country.”

Chang said all of the following are indications of an economy sliding downward on an increasingly steep slope:

Despite China’s official report that 2025 GDP increased by five percent, “That is unlikely to have been the case,” he said.
The consumer price index showed that consumer sentiment was weak throughout last year. It grew 0.0% for the year, and that was only after too-good-to-be-true December numbers, to lift it out of negative territory, to flat zero. The factory sector, we know, is in deflation.
The producer price index for March increased by only 0.5%. “That did break a 41-month losing streak, but we know that the increase was due almost entirely to the oil shock created by the ongoing Iran War,” Chang said, adding that China will likely return to a deflationary environment.
China still maintains unrealistic growth targets of 4.5% to 5%. “To reach these targets, the Chinese government needs to pour money into the economy,” he said.
Domestic consumption of 39% of GDP is among the lowest in the world and is declining.
Chang cited an unnamed scholar who has reported that overall unemployment is at 20%, and likely double that for people ages 16-24.
China’s national debt, which is reported to be $18.7 trillion, does not include “hidden debt.” He said the debt-to-GDP number is likely 375%. America’s is about 122%. And China owes much of that money to its own banks. “The history of financial crises tells us that the worst financial crises are those when countries owe money to themselves,” he said.

Chang blamed a lot of the country’s problems on decisions by its central planning functions. For instance, after the 2008 global financial crisis, China cranked out a monetary stimulus for the next four years that was the same size as that issued in the United States, despite the Chinese economy being one-third the size. Chang also cited China’s population decline as an economic issue and blamed the country’s one-child-only policy that was in effect for three decades and has kept China’s birth rate [the number of children produced by women of child-bearing age] at about one. Large countries need a rate of 2.1 just to maintain population. “It’s now it’s a three-child policy, but people still aren’t procreating,” he said, adding that by 2099, the country will have lost a third of its population, a horrible situation for future economic demand.

A warning

Chang ended with a dire warning, saying that while no one in China wants war, Xi’s threshold for aggression is likely getting lower. “We are now transitioning from a period of general calm into one of constant turbulence. And as a result, we are starting to see deglobalization,” he said, offering the thoughts of late Harvard political scientist Samuel Huntington. “[He wrote that] economic interdependence fosters peace when countries see a high level of trade in the future. When they see their interests diverging, war is likely to result.”

Christian Thiele, SAE’s senior director of Global Ground Vehicle Standards, joined Chang onstage after his main remarks and asked curated questions.