As the US-Iran conflict enters its second month with no sign of an off-ramp, the world has had to adapt to a sudden and severe energy shock. Warren Buffett once said that only when the tide goes out do you discover who has been swimming naked. China, it turns out, had been quietly getting dressed for decades, but the water is still rising and the swimsuit might not hold.

Since 1978, the Chinese economy has maintained an impressive near-double-digit growth rate, averaging 9.5% annually until 2019. After surpassing the United States in PPP terms in 2014, many analysts expected the same to occur in nominal terms by 2030. However, this prospect now seems increasingly unlikely. At current market exchange rates, China's economy has decreased from 75% of U.S. GDP in 2021 to roughly 64% today, a change attributed to a stronger dollar, a rapid post-pandemic recovery in t