China’s Official Calm Belies a War Battering Small Factories

What: China's economic growth is slowing, with small factories being disproportionately affected by the ongoing war.
Why: The conflict has led to supply chain disruptions, inflation, and a decline in domestic demand.
Signal: Factory output has fallen **8.5%** in the past year, with many small businesses struggling to stay afloat.
Target: The Chinese government has set a target of **6%** GDP growth for 2026, which may be difficult to achieve given the current economic conditions.
Risk: The decline of small factories could lead to widespread job losses and increased poverty in rural areas.