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CNBC
4 hours ago
- Business
- CNBC
Xi wants to boost China's advance manufacturing prowess — and Trump may not like it
Forget the factory lines for socks, sneakers and T-shirts. U.S. President Donald Trump wants to boost the domestic production of high-tech products, and not apparel or footwear, he told reporters Sunday. However, China is doubling down on its efforts to bolster advanced manufacturing, which could put both countries on a collision course. Just last week, Chinese President Xi Jinping reaffirmed his plans for manufacturing-led growth during a visit to the northern province of Henan, pressing ahead with a strategy long criticized by the U.S. and major trade partners for deepening global trade imbalances. Xi told workers at a state-owned ball-bearing factory that self-reliance in advanced manufacturing is "the right path" for China and the "backbone" of its economy, according to an official statement. The manufacturing sector contributed to over 25% of China's GDP in 2023, according to the World Bank. While China's push to expand its manufacturing capabilities is part of its goal to achieve self-reliance, especially in high-tech sectors, this could run counter to the Trump administration's core demands in the ongoing trade talks, experts warn. Trump wants China to address the trade imbalances and has slammed Beijing for providing state subsidies to Chinese companies, thereby distorting competition. However, there is "little scope" for China to budge and scale back its manufacturing-led strategy, which is closely tied to Beijing's drive for self-reliance, said Allan von Mehren, China economist at Danske Bank. "I'm not too optimistic on a big deal between the U.S. and China," Mehren said, anticipating U.S. tariff rates on Chinese goods to hold at around 40%. The "Made in China 2025" ten-year plan, released in 2015 — two years after Xi came into power — aimed to transform China into a leading high-end manufacturer, from electric vehicles and commercial aircraft to semiconductors and robots. The Center for Strategic and International Studies estimated in a 2022 report that China's spending in funding favored industries amounted to at least 1.73% of its GDP in 2019, significantly higher than the U.S., which spent 0.39% of its GDP on industrial support in 2019. These include direct grants and tax benefits to its prized sectors, with nearly all large, listed Chinese firms receiving some form of state subsidies, according to economic consulting firm Rhodium Group. Despite the support, China missed several key targets from its ten-year plan, including those for aerospace and high-end robots, and fostered unhealthy industrial competition that worsened global trade tensions, according to the European Chamber of Commerce in China. U.S. Treasury Secretary Scott Bessent, in an interview with CNBC earlier this month, sounded optimistic about reaching a middle ground with China: "We need more manufacturing, they need more consumption, so there is a chance to rebalance together, we'll see if that's possible." But it remains unclear whether Bessent will make that a priority during the ongoing trade negotiation with Beijing as part of the 90-day trade truce. The U.S. trade deficit with China is unlikely to "narrow substantially," Jing Wang, China economist at Nomura, and the team said in a note. They expect Beijing to reduce its reliance on U.S. imports and for American manufacturers to take years to shift manufacturing onshore and find suitable alternatives. "As the U.S. is the most buoyant consumer market worldwide, a sudden flood of cheaper Chinese goods to the rest of the world will inevitably spark global backlash," Wang added. China's continued industrial push and ramped-up exports are stirring anxiety in non-U.S. markets and inviting fresh trade barriers. As the specter of U.S. tariffs loomed at the start of the year, Chinese toy manufacturers in Yiwu city, a manufacturing hub, rushed to redesign Santa Claus figurines with rounder faces and blue eyes in hopes of appealing more to European consumers. But their search for new markets to compensate for the opportunities lost in the U.S. is stirring anxiety in Europe, said Nick Marro, principal economist at Economist Intelligence Unit. "By the end of this year, it's not just U.S.-China tensions that we need to watch, it's going to increasingly be EU-China tensions ... And it's no longer just going to be about electric vehicles [but] across a whole wide range of different products," Marro added. Top finance officials from G7 nations, led by the U.S., convened last week to discuss steps to address overcapacity and unfair trade practices — "with a clear aim of curbing China's export saturation," said Wang Dan, China director at Eurasia Group. These moves could still be interpreted in Beijing as a "deliberate provocation" and prompt it to use other ways to create headaches for foreign businesses eyeing the Chinese market. "Delays in licensing, exclusion from local incentive schemes, or tighter oversight may follow if tensions rise in other areas of the bilateral relationship," Eurasia's Wang said. China's grip on low-end manufacturing could also undercut manufacturing in developing nations, according to Leah Fahy, China economist at Capital Economics. For example, India's share of global exports in furniture, toys and games has stagnated in recent years, while garment exports declined. China widened its lead for these goods in the same period. India, Vietnam and Indonesia have imposed various protectionist measures to provide some relief for domestic producers from intense price competition, particularly in sectors facing overcapacity, cheap imports. That said, some argue that excess Chinese capacity could offer a silver lining for inflation-weary economies by easing price pressures. "China is going to be exporting deflation to the rest of the world," said Marro, noting that for markets with limited manufacturing bases, like Australia, cheap Chinese imports could ease the cost-of-living crisis and help bring down inflationary pressure. Economists at home and abroad have called on Beijing to shift to a consumption-led model and reduce reliance on manufacturing, a strategy widely blamed for deepening deflationary pressure in the economy. Chinese customs data in April offered a fresh reminder of the imbalance between China's productive capacity and its domestic demand. Its trade surplus hit a record high of $992.2 billion, driven by persistent imbalances with major partners including the U.S., the European Union and Southeast Asia. The Chinese leadership has stepped up its support, aiming to divert U.S.-bound goods to sell to domestic consumers. But convincing consumers, wary of income and job prospects, to spend again has proven to be a challenging task. China's retail sales growth slowed to 5.1% in April, missing economists' expectations, with automobile sales lagging significantly, growing just 0.7% from a year earlier, compared with a 5.5% jump in March. Beijing's shift toward a more consumption-led model will see a "very slow reform momentum," said Louise Loo, lead economist at Oxford Economics, forecasting consumption to account for half of China's economy only by mid-century, well below the 70% shares seen in the U.S. However, Xi's focus on manufacturing is not entirely unjustified, as Washington is likely to maintain a firm grip, restricting Beijing's access to more advanced technology. "The Trump administration, by treating China as the most potent near-peer adversary, would make the yard bigger and fence higher," Nomura's Wang said. The "small yard, high fence" was a strategy adopted by the Biden administration aimed at safeguarding a narrow set of critical technologies (small yard) with tough and extensive restrictions (high fence), while maintaining normal economic exchange in other areas. "Strategic decoupling remains inevitable on national security concerns," Wang added.
Hindustan Times
a day ago
- Business
- Hindustan Times
Donald Trump steals Xi Jinping's favourite foreign policy
FOR AN ECONOMIC and military giant, China is strangely drawn to pint-size diplomacy. Though it is a bully in its backyard, China is cautious farther from home. In such hotspots as the Middle East, it is transactional, self-interested and focused on business deals. China often acts like a middle power, as if competing in the same league as Turkey or the United Arab Emirates. This approach has survived the rise of Xi Jinping, the most powerful Communist Party chief in decades. At home Mr Xi talks of returning China to global pre-eminence and of building world-class armies to smash any foe. To foreigners Mr Xi frames his country as a peace-loving giant. When Chinese trade missions set off down the ancient Silk Road, they did not seek to conquer new lands, Mr Xi declared in 2023. He was addressing trade partners gathered to mark the first decade of the Belt and Road Initiative (BRI), a big Chinese lending and infrastructure scheme. Chinese travellers 'are remembered as friendly emissaries leading camel caravans and sailing ships loaded with goods', said Mr Xi. Even in regions stalked by sectarian violence, ethnic hatred and religious extremism, Chinese leaders propose prosperity as a cure-all. In 2016 Mr Xi told the Arab League: 'Turmoil in the Middle East stems from the lack of development, and the ultimate solution will depend on development.' The use of force has brought disaster to the region, Mr Xi went on. Happily, he said, China could offer trade, technology and infrastructure to help Arab governments pursue reforms without jeopardising stability. Scholars in China praise this as 'Chinese wisdom' and a source of diplomatic strength. Because China is all about business, they aver, their country can sign energy and construction contracts with opposing sides in a civil war, as happened some years ago in Libya. Pragmatic China can play mediator between such foes as Iran and Saudi Arabia, which restored diplomatic relations after China-hosted meetings in 2023. A new book, 'China's Changing Role in the Middle East. Filling a Power Vacuum?' by Chuchu Zhang of Fudan University, offers a useful survey. At times it is boosterish, for instance when it glosses over the large role that Iraq and Oman played in brokering that Saudi-Iranian rapprochement. But it is commendably frank about narrow interests that sometimes guide Chinese diplomacy. In the book a former Chinese ambassador explains why, just over a decade ago, his country vetoed several UN Security Council resolutions to impose sanctions on Bashar al-Assad's regime in Syria for the alleged use of chemical weapons against its people and other acts. In the ambassador's telling, China vetoed Western-drafted resolutions so it would be taken seriously in the region, arguing: 'If we hadn't, China would have been excluded from any negotiations concerning Syria or other Middle Eastern issues'. Ms Zhang reports that 'as an inward-looking power' China's 'biggest interest' in Syria's civil war was the presence of hundreds, possibly thousands, of Uyghur militants from China's far-western region of Xinjiang, fighting alongside Islamist rebels. Praising Mr Assad for combating terrorism, Chinese officials called on outside powers to 'abandon the fantasy of regime change' in Syria. China's default response to hard problems is to call for mediation, and to suggest that meddling by an arrogant, hegemonic West is the root cause. Chinese envoys blame American sanctions for the death of civilians, for instance in Iran during the covid-19 pandemic. Time and again they condemn outside powers for trying to impose Western-style democracy. Officials boast that Chinese investments and deals come without political conditions. Sceptics would add that China favours opaque contracts that allow rulers to enrich themselves. It is a stingy aid donor, pledging $2m in 2023 to UNRWA, the UN agency that assists Palestinians—less than the contribution from Iceland (population 400,000). Now, though, Chinese leaders face an American president as transactional as they are, and just as scornful of overseas aid. If anything, Mr Trump sounds more contemptuous of predecessors who toppled dictators in freedom's name. In Saudi Arabia on May 13th Donald Trump praised Gulf Arab rulers for 'forging a future where the Middle East is defined by commerce, not chaos; where it exports technology, not terrorism.' This progress was achieved without lectures from Westerners, Mr Trump went on. 'In the end the so-called nation-builders wrecked far more nations than they built, and the interventionalists were intervening in complex societies that they did not even understand themselves,' he said. Transactional China meets its match In February Mr Trump halted graft investigations under the Foreign Corrupt Practices Act, blaming the law for erecting 'excessive barriers to American commerce'. Though Mr Trump loves economic coercion, his special envoy, Ric Grenell, has claimed that his boss frets that 'sanctions penalise American companies'. Mr Trump's challenge comes at a painful time for China. Its economy is slowing, leaving less money to invest overseas. BRI lending peaked a decade ago and debts are now coming due across the developing world. As a security provider, China is an also-ran in the Middle East. America makes advanced weapons and world-beating semiconductors and airliners, selling billions of dollars-worth during Mr Trump's visit. China is not out of the game. It remains a huge energy buyer. It has green technologies to sell. It offers an alternative for leaders eager to hedge their bets. Bluntly, though, its values-free foreign policy has been swiped by a richer rival. Its response will be revealing. If China's commitment to peace through development is sincere then it can stick with pragmatism and deal-cutting. If China's real aim is to shove America aside, then watch out. Mr Trump has given China cause to amp up the ideology, and push harder. Get 360° coverage—from daily headlines to 100 year archives.
Time of India
a day ago
- Politics
- Time of India
Echoes of Tagore in Hills of Hunan: A journey through China's new village dream
Changsha (Hunan province, China): "I shall consider myself fortunate if, through this visit, China comes nearer to India and India to China – for no political or commercial purpose, but for disinterested human love and for nothing else," Asia's first Nobel laureate Rabindranath Tagore said a century ago. He first visited China in April 1924. About a fortnight before his 164th birth anniversary on May 7, a media delegation from Bengal was invited by the Chinese Consulate in Kolkata to observe China's poverty alleviation initiatives. It is also 75 years of Indo-Chinese diplomatic relations. Bullet trains (zipping at 310 kmph) from Changsha to ancient Fenghuang town, via the state-of-the-art Aizhai bridge, took us to Shibadong, the model village showcasing China's "targeted poverty alleviation campaign." Shibadong, which translates to "18 caves," is nestled in the highlands of the Wuling mountains. It is not very far from Shaoshan, the village where Mao Zedong, the founder of the People's Republic of China, was born on December 26, 1893. Cut to Nov 2013. Around 130 households (over 60% of Miao populace in Shibadong) were living below poverty line. That is when President Xi stepped in. He walked to the modest dwelling of 72-year-old matriarch Shi Basan, who has now become synonymous with the transformation narrative. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like People Born 1940-1975 With No Life Insurance Could Be Eligible For This Reassured Get Quote Undo "I didn't recognise the General Secretary. He said I was his elder sister and that he was here to serve us. The General Secretary (Xi) checked if there was enough food, if we grew fruits, and if the livestock (pigs) was well fed. He went to the bedroom, turned over the quilt to see how much rice was in store…" Shi said. The President realised villagers were leaving every other day, looking for greener pastures (jobs). That is when he introduced the "targeted poverty alleviation" programme. The delegation visited Xiaqi village in Xianbaishi town where former boat-dwelling fishing communities have transformed into successful tea cultivators. The town is in the Fujian province, which has been President Xi Jinping 's working zone as a young CPC leader. "Actually, every village, town, and city in China is the President's working area," said Consul Zhang Zizhong, who led the media team. (The TOI correspondent was in China at the invitation of the Chinese govt)
Epoch Times
a day ago
- Business
- Epoch Times
Beijing Turns Its Eye Toward Latin America
Commentary Despite the pause in President Donald Trump's tariff pressure on China, Beijing knows how vulnerable its economy is to a trade war with the United States. In an effort to find alternatives to the American relationship, China has launched a charm offensive the world over, most pointedly in Washington's backyard, in Latin America. With Latin American trade in mind, Beijing has convened meetings of the China-Community of Latin American and Caribbean States (CELAC) Forum. Beijing launched the group in 2015. At these most recent meetings, Chinese leader Xi Jinping reminded delegates from the 30 countries gathered in Beijing earlier in May how much China–CELAC trade has grown in the years since the forum was inaugurated, to the equivalent of $515 billion in 2024, still smaller than Xi also touted China's Belt and Road Initiative (BRI, also known as One Belt, One Road) and pledged a 66 billion yuan (about $9.2 billion) credit line for fresh infrastructure investment. It is an attractive amount to less-than-fully developed societies in Latin America and the Caribbean. But as a sign of China's other severe economic problems, Xi's recent offer was less than half China pledged in 2015. Credit lines and the glitter of the BRI were not all Xi offered at the forum. He promised both Brazil and Colombia that China would buy more of their exports and that, in addition to his pledge, he would encourage both private and state-owned Chinese firms to invest more in the two countries. Especially Brazil welcomed these promises, since that country and its president, Luiz Inacio Lula da Silva, have positioned themselves to deliver agricultural products to China should a trade war with the United States force China to cut back on heretofore significant American agricultural imports. As part of Beijing's courtship of Latin American trade ties, Xi also announced that Beijing will allow for one year visa-free entry into China for the nationals of five Latin American countries: Argentina, Brazil, Chile, Peru, and Uruguay—not coincidentally, all major agricultural exporters. Related Stories 5/17/2025 2/28/2025 No doubt Xi was especially pleased to announce that Although more than 20 Latin American countries are among the 150 nations participating in China's BRI, the new presence of Colombia is especially important to Beijing, because Panama recently announced its decision to leave the program when its membership expires in about two years. Beijing blames this decision on pressure from Washington, but it is otherwise entirely consistent with the behavior of other nations that have discovered how a BRI affiliation comes with terms and conditions that can be burdensome. The meetings could have been a diplomatic win for Beijing. Though trade issues remain ambiguous and Latin America, even with the Caribbean, cannot make up for lost trade with the United States, China nonetheless appears to have made some progress moving away from its dependence on the United States, should it become necessary. So far, the Trump administration has said nothing about China's actions or those of the nations involved with the China–CELAC Forum. In a purely economic light, things look less like a triumph. The arrangements proposed by Xi will impose costs on a weakened Chinese economy that can ill afford them, and even in the best possible light from Beijing's point of view, the conclusions of the forum hardly bind Latin America to China. Indeed, Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Epoch Times
a day ago
- Politics
- Epoch Times
China's New Security White Paper: CCP's Blueprint for Control at Home and Abroad
Commentary China's new national security white paper reveals the sweeping plan of the Chinese Communist Party (CCP) to merge internal control with global ambition, framing ideology, sovereignty, and economic resilience as tools for reshaping the world order. Beijing has released a new white paper on national security, titled 'China's National Security in the New Era,' marking a major shift in the CCP's approach. While previous white papers focused narrowly on military and defense, this new report presents a sweeping framework that redefines national security as the foundation of all state policy. It formalizes Chinese leader Xi Jinping's doctrine as a central pillar of governance, guiding both domestic priorities and foreign strategy. The paper presents a broad vision of security that extends beyond traditional defense to encompass political stability, economic development, technological self-reliance, and control of emerging domains. Central to this vision is the concept of 'holistic security,' which combines conventional priorities such as sovereignty and military readiness with next-generation concepts, including cyberspace, artificial intelligence, biotechnology, public health, and food system resiliency. The CCP frames political security as the 'lifeline' of national security, asserting that internal and external threats must be addressed together to preserve regime stability and economic continuity. The paper underscores the Party's insistence on ideological conformity and its intolerance of dissent, calling for political control across all areas of governance. It advocates early threat detection through Party networks embedded in institutions and strict regulation of public discourse, especially online. The white paper promotes China's Global Security Initiative (GSI) as a counterweight to Western-led security frameworks. Introduced by Xi in 2023, the GSI lays out Beijing's vision for reshaping global security governance, rejecting what it calls Cold War mentality, unilateralism, and bloc politics. Related Stories 4/1/2025 12/17/2024 While the CCP accuses the United States of forming divisive blocs, it presents its own initiatives—including the Belt and Road (BRI, also known as One Belt, One Road), BRICS, the Shanghai Cooperation Organization (SCO), and partnerships with ostracized countries such as Russia, Iran, and North Korea—as inclusive efforts that promote what it calls multilateralism and global equity under a rules-based international order. The paper places special emphasis on emerging security domains, including cybersecurity, outer space, maritime rights, and the protection of overseas infrastructure tied to Belt and Road projects. It also identifies national grain reserves, seed technology, and energy diversification as strategic priorities for reducing reliance on foreign supply chains. Beijing pledges to strengthen its risk management systems to guard against external threats, such as economic sanctions—measures clearly aimed at the United States. Xi is positioning the Chinese economy to endure a prolonged trade conflict with the Trump administration and has drawn lessons from the sanctions imposed on Russia over Ukraine, preparing China to withstand similar pressure should it invade Taiwan. For Washington, the document signals Beijing's deepening commitment to authoritarian governance and its resolve to challenge U.S. influence, particularly in the Indo–Pacific. The emphasis on sovereignty and ideology foreshadows more aggressive diplomacy, continued These concerns were echoed in recent testimony before Congress by retired U.S. Army Gen. Charles Flynn, who warned that a Chinese invasion of Taiwan is 'no longer distant or theoretical.' Viewing Taiwanese President Lai Ching-te as a disruptive force pushing the island toward formal independence, Beijing has intensified its pressure campaign. The CCP has launched unprecedented military exercises around Taiwan, including large-scale naval and air operations simulating blockades and rapid-force deployments. These drills now occur with little or no warning and involve the Chinese navy, air force, coast guard, and maritime militia, reflecting preparation for a range of contingencies, U.S. partners in Southeast Asia, especially the Philippines and Vietnam, should expect ongoing friction in the South China Sea. The white paper defines the CCP's maritime claims as a core national security issue, asserting Beijing's right to defend what it views as sovereign territory, regardless of international rulings. This position is reinforced by the Foreign Relations Law (2023), which codifies the CCP's control over foreign policy and permits countermeasures against actions deemed harmful to the Chinese regime's sovereignty or development. Under Beijing's doctrine of lawfare, even military seizures of disputed territory are framed as acts of self-defense, as the regime views regions like the South China Sea and Taiwan as integral parts of the Chinese homeland. Ultimately, the CCP's new white paper lays out a security framework that is expansive, ideological, and authoritarian. Its release formalizes the idea that communist China's global rise is inseparable from the Party's domestic grip on power and its ambition to shape a new world order led by Beijing. Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
