>At a recent high-level government conference in Beijing, senior officials basked in China’s success the past year in its trade war with Donald Trump, boasting that the country’s system of state-directed planning was superior to unfettered US-style capitalism.
>“Our five-year planning system ensures policy consistency and continuity — something western politicians can never achieve given their constant changes of government,” one senior cadre told the gathering of about 200 people in a central Beijing hotel.
>For Beijing, the tariff war is the clearest evidence yet that President Xi Jinping’s strategy of investing heavily in high-tech production and industrial self-reliance is paying off, despite persistent deflation at home and growing complaints from abroad about soaring Chinese trade surpluses.
>Trump’s attempt to unilaterally impose tariffs on Chinese goods last year ended with him being forced to agree to a one-year trade truce with Xi at a summit in South Korea during October.
>The stand-off, during which China threatened to block US access to the rare earth metals vital to many advanced manufacturing processes, demonstrated for the first time Beijing’s ability to stop even Washington from decisively closing its markets against Chinese-made products.
>Analysts say it will embolden China to push ahead with its export-led growth model and compete with the US for 21st century technological and economic supremacy. Beijing’s new 15th five-year plan for 2026-2030, due for release in March, envisages China not only dominating legacy industries such as steel making or toy manufacturing but also future technologies, such as robotics and artificial intelligence.
>“This is a zero-sum game,” says Joerg Wuttke, a partner at consultancy DGA Group and former European Union Chamber of Commerce in China president. Based on the five-year plan goals, he predicts China could raise its global share of manufacturing from about 30 per cent to 40 per cent.
>“They’re telling other countries, don’t mess with us, don’t compete with us, you can’t beat us,” he says.
>But even as China touts its domination of global manufacturing — trade figures released in December show it is set for its first surplus in goods of more than $1tn in 2025 — vulnerabilities are building in its domestic economy.
>A prolonged property market slowdown has undermined local government finances, household sentiment and domestic demand, leading to deflation and falling wages. Policymakers are trying to balance keeping the country’s export machine running while issuing ever more debt to prop up the weakening domestic economy.
>“In the past few years, it’s been the property sector dragging down the economy,” says Hui Shan, chief China economist at Goldman Sachs. “At this juncture, I think the economy is now dragging down property.”
>The IMF’s managing director, Kristalina Georgieva, said in Beijing in December that China needs “more forceful measures to be implemented with greater urgency”, urging it to fix its “imbalances” in its economy. Such a large country cannot survive on exports alone, she added.
>“Boosting consumption would unlock . . . a more durable source of growth.”
>At the Communist party’s Central Economic Work Conference in December, the meeting that sets priorities for the following year, Xi and other senior leaders celebrated China’s “significant enhancement of its hard power” over the past five years, according to state media.
>Three years after China’s economy emerged from its strict Covid controls, its global export market share has risen to 15 per cent, up from about 13 per cent in 2017, and is set to rise to 16.5 per cent by 2030, according to a study led by Chetan Ahya, chief Asia economist at Morgan Stanley. China’s share of global manufacturing value added has risen to 28 per cent.
>Its trade goods surplus with the US had fallen to $239bn as of September 2025 on a 12-month trailing basis from a peak of $418bn in December 2018, according to US Census Bureau data — though much of the difference is thought to have been products redirected to the US through other countries, such as Vietnam and Mexico.
>Ahya attributes part of China’s latest export success to its state-led model, which pushes investment into emerging sectors such as green energy, “even if ahead of [its] time”. China backs its bets with direct state investment in infrastructure and manufacturing, state bank lending, tax incentives and subsidies.
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>At a recent high-level government conference in Beijing, senior officials basked in China’s success the past year in its trade war with Donald Trump, boasting that the country’s system of state-directed planning was superior to unfettered US-style capitalism.
>“Our five-year planning system ensures policy consistency and continuity — something western politicians can never achieve given their constant changes of government,” one senior cadre told the gathering of about 200 people in a central Beijing hotel.
>For Beijing, the tariff war is the clearest evidence yet that President Xi Jinping’s strategy of investing heavily in high-tech production and industrial self-reliance is paying off, despite persistent deflation at home and growing complaints from abroad about soaring Chinese trade surpluses.
>Trump’s attempt to unilaterally impose tariffs on Chinese goods last year ended with him being forced to agree to a one-year trade truce with Xi at a summit in South Korea during October.
>The stand-off, during which China threatened to block US access to the rare earth metals vital to many advanced manufacturing processes, demonstrated for the first time Beijing’s ability to stop even Washington from decisively closing its markets against Chinese-made products.
>Analysts say it will embolden China to push ahead with its export-led growth model and compete with the US for 21st century technological and economic supremacy. Beijing’s new 15th five-year plan for 2026-2030, due for release in March, envisages China not only dominating legacy industries such as steel making or toy manufacturing but also future technologies, such as robotics and artificial intelligence.
>“This is a zero-sum game,” says Joerg Wuttke, a partner at consultancy DGA Group and former European Union Chamber of Commerce in China president. Based on the five-year plan goals, he predicts China could raise its global share of manufacturing from about 30 per cent to 40 per cent.
>“They’re telling other countries, don’t mess with us, don’t compete with us, you can’t beat us,” he says.
>But even as China touts its domination of global manufacturing — trade figures released in December show it is set for its first surplus in goods of more than $1tn in 2025 — vulnerabilities are building in its domestic economy.
>A prolonged property market slowdown has undermined local government finances, household sentiment and domestic demand, leading to deflation and falling wages. Policymakers are trying to balance keeping the country’s export machine running while issuing ever more debt to prop up the weakening domestic economy.
>“In the past few years, it’s been the property sector dragging down the economy,” says Hui Shan, chief China economist at Goldman Sachs. “At this juncture, I think the economy is now dragging down property.”
>The IMF’s managing director, Kristalina Georgieva, said in Beijing in December that China needs “more forceful measures to be implemented with greater urgency”, urging it to fix its “imbalances” in its economy. Such a large country cannot survive on exports alone, she added.
>“Boosting consumption would unlock . . . a more durable source of growth.”
>At the Communist party’s Central Economic Work Conference in December, the meeting that sets priorities for the following year, Xi and other senior leaders celebrated China’s “significant enhancement of its hard power” over the past five years, according to state media.
>Three years after China’s economy emerged from its strict Covid controls, its global export market share has risen to 15 per cent, up from about 13 per cent in 2017, and is set to rise to 16.5 per cent by 2030, according to a study led by Chetan Ahya, chief Asia economist at Morgan Stanley. China’s share of global manufacturing value added has risen to 28 per cent.
>Its trade goods surplus with the US had fallen to $239bn as of September 2025 on a 12-month trailing basis from a peak of $418bn in December 2018, according to US Census Bureau data — though much of the difference is thought to have been products redirected to the US through other countries, such as Vietnam and Mexico.
>Ahya attributes part of China’s latest export success to its state-led model, which pushes investment into emerging sectors such as green energy, “even if ahead of [its] time”. China backs its bets with direct state investment in infrastructure and manufacturing, state bank lending, tax incentives and subsidies.