It was meant to be the year China’s economy, unshackled from the world’s strictest COVID-19 controls, roared back to help power global growth.

Instead, halfway through 2023, it’s facing a confluence of problems: Sluggish consumer spending, a crisis-ridden property market, flagging exports, record youth unemployment and towering local government debt. The impact of these strains is starting to reverberate around the globe, affecting everything from commodity prices to equity markets. The risk of Federal Reserve hikes tipping the U.S. into recession has also heightened the prospect of a simultaneous slump in the world's two economic powerhouses.

What's worse, President Xi Jinping’s government doesn’t have great options to fix things. Beijing’s typical playbook of using large-scale stimulus to boost demand has led to massive oversupply in property and industry, and surging debt levels among local governments. That’s sparked a discussion about whether China is headed for a Japan-style malaise after 30 years of unprecedented economic growth.