Atmospheric CO2 Points to Dramatic Slowing of China's Economy

China is, by a very wide margin, the world’s biggest producer of carbon dioxide emissions.

China’s emissions of CO₂ are so large that we can use measurements of the concentration of carbon dioxide in the atmosphere collected by the remote Mauna Loa Observatory to get a relatively good sense of how its economy is performing. The reason we can do that is because China’s production of materials like steel and cement, which are major contributors to its CO₂ emissions, are directly linked to its growth. Not uncoincidentally, China is the world’s largest producer of both materials, with much of its production supporting the construction and industrial sectors of its economy. The following video we found to illustrate this article shows both coming together in a Chinese factory that produces prefabricated reinforced concrete panels for buildings.

In July 2025, the rate at which carbon dioxide is accumulating in the Earth’s atmosphere slowed for the fifth time in the last six months. Measured as the trailing year average of the year-over-year rate of change in the atmospheric concentration of CO₂, this measure peaked in January 2025. Since then, it has fallen by nearly 11%, reversing what had been an period of increase dating back to the end of China’s zero-Covid lockdowns at the end of December 2023.

The following chart shows how this measure has evolved from January 2000 through July 2025:

Atmospheric carbon dioxide concentration data lags behind changes in CO₂ output, taking several weeks to diffuse into the Earth’s air after being emitted. The peak in January 2025 coincides with Chinese emissions peaking in December 2024, which itself coincides with efforts by China’s exporters to crank up production to beat the clock on new U.S. trade tariffs going into effect in 2025. January 2025 saw the Biden administration final tariff increases go into effect, while President Trump’s new tariffs were put into effect in April 2025.

Since the atmosphere’s pace of CO₂ accumulation peaked at 3.57 ppm in January 2025, it has fallen by 0.38 ppm to 3.19 ppm in July 2025. With an estimate world population of 8.005 billion people, that drop represents roughly a reduction of 3 billion metric tonnes of carbon dioxide emissions. It also represents an estimated $12.6 trillion decline in the world’s GDP during the last six months.

The decline in China’s CO₂ emissions have been large enough that scientists are speculating it may represent a permanent peak in the country’s emissions, with China’s expansion of renewable energy sources like solar and hydroelectric power. While that remains to be seen, for now, this observation tells us that the portions of China’s economy that are the heaviest users of the reliable power production supported by burning fossil fuels are struggling. Those sectors are, not uncoincidentally, the ones that produce steel and cement, whose production has been falling because China’s economy is struggling. As described by the Centre for Research on Energy and Clean Air: “The steel and cement industries are the largest CO2 emitters in China, when emissions from their electricity use are included. They are also bellwethers of real estate, infrastructure and other fixed asset investments that play an outsized role in China’s emissions and economy.”

Research at the Mauna Loa Observatory has been targeted for potential funding cuts. We suggest that funding should continue because of the value of the CO₂ data it collects which is correlated with economic output, especially China’s. Given that China’s economic data is becoming more opaque over time and how large its CO₂ emissions are, U.S. intelligence services may find it useful to continue funding the observatory’s measurements of carbon dioxide because of the practical application of what that data can tell us about the state of China’s economy.

Or for that matter, assessing the magnitude of other geopolitical events.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Online Data]. Updated 5 August 2025.