New Delhi [India], November 22 (ANI): China’s economic challenges are reshaping global trade dynamics, with Beijing increasingly relying on manufacturing and exports to compensate for a sluggish domestic economy, noted the US-China Economic and Security Review Commission’s 2025 Report to Congress.
The report warns that the growing imbalance is triggering what the report’s experts describe as “China Shock 2.0,” impacting jobs and industrial capacity across multiple regions, including the United States.
The Commission highlights a widening “two-speed economy” inside China. While consumption and household spending remain weak, state-backed high-tech and heavy manufacturing industries continue to enjoy abundant capital and policy support. Investments are increasingly skewed toward advanced manufacturing, including sectors targeted under China’s industrial programs, as Beijing treats industry as its primary engine of growth amid a property sector collapse and massive debt pressures.
China is now more dependent than ever on exporting manufactured goods. The report states that excess goods from China’s factories are being pushed into foreign markets because domestic demand cannot absorb them, to dominate global value chains and push out competitors.
As China redirects supply into global markets, the Commission warns of an emerging wave of dumping, overcapacity, and subsidised exports harming foreign manufacturers. This trend has already triggered protectionist responses, with several emerging economies imposing new trade barriers to defend their industries.
The report warns that the United States could see further losses in critical supply chains if China’s export surge goes unchecked.
Technology competition is further aggravating the economic standoff. US restrictions on advanced semiconductor exports to China are increasingly being used as bargaining tools in broader trade negotiations.
China has pushed back forcefully, targeting individual US companies and restricting exports of critical minerals used in high-end manufacturing and defence systems.
The Commission notes that as bilateral tensions escalate, Chinese producers are turning to third markets for growth, offshoring manufacturing to bypass tariffs and embed themselves further in global supply chains. As China expands its footprint overseas, it continues to position itself as the world’s reliable trade partner, despite benefiting from global rules it regularly circumvents.
With the 25th anniversary of China’s entry into the WTO approaching, the report concludes that Beijing has grown into one of the world’s biggest beneficiaries of the rules-based trade system, while maintaining a state-led economy described as “fundamentally inconsistent” with those very rules.
As China’s structural imbalances collide with U.S. efforts to protect strategic technology sectors, the Commission warns that the global trading system is entering a period of unprecedented strain–where industrial policy, trade dependency, and national security are no longer separate spheres, but drivers of an intensifying economic rivalry. (ANI)
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