{
  "id": 9631734,
  "title": "China’s industrial strengths must also benefit its trading partners",
  "url": "https://urgent.news/2026/09/24/chinas-industrial-strengths-must-also-benefit-its-trading-partners-9631734",
  "topic": "business",
  "section": "Business",
  "published": "2026-09-24T21:30:12.000Z",
  "source": {
    "name": "Reuters Business via SCMP",
    "slug": "reuters-business-via-scmp",
    "url": "https://www.scmp.com/opinion/china-opinion/article/3368293/chinas-industrial-strengths-must-also-benefit-its-trading-partners"
  },
  "original_language": "en",
  "account": "In addressing the widening trade imbalance between the European Union and China, the European Commission is urging Beijing for progress by the following month, with the possibility of implementing new protectionist trade policies. This raises questions on how China and its trading partners can reconcile perceived economic discrepancies while simultaneously benefiting from China's industrial prowess. Last year, China's merchandise trade surplus exceeded US$1.2 trillion, prompting other exporting economies to call for trade controls. The oft-cited explanation for China's industrial success, \"overcapacity,\" though a contributing factor, fails to fully encapsulate the complexity of China's industrial strengths. These include a vast scale of its economic ecosystem, robust domestic competition, and intricate supplier networks. An effective solution must differentiate between genuine trade imbalances and the productivity advantages that open avenues for collaboration. China's auto industry exemplifies the country's competitive edge. According to the International Energy Agency, manufacturing an electric vehicle in China is 30 percent cheaper than in advanced economies. However, the bulk of this cost advantage (around 70 percent) stems from China's advanced manufacturing system rather than government subsidies. Rhodium Group's research further underscores this, estimating BYD, a prominent Chinese carmaker, enjoys a cost advantage of approximately US$4,700 per vehicle over Tesla's Chinese operations. Only about US$292 of this advantage can be attributed to direct government grants; the majority is derived from vertical integration and reduced research, administrative, and supplier costs. China's textile industry serves as a case study of this. Despite wage increases and production shifts to other countries, China maintains a significant share of global textile exports (over 30 percent) due to its supplier clusters, infrastructure, skills, and capacity for production upgrades. This doesn't suggest China should maintain this trajectory indefinitely. Chinese policymakers have been deliberating a consumption-led rebalancing for two decades, with an explicit plan unveiled in the 2025 consumption action plan. This plan targets wage improvements, pensions, healthcare, childcare, paid leave, and benefits for migrant and flexible workers. The government's subsequent adoption of China's first consumption-focused five-year plan, targeting retail sales of approximately US$8.96 trillion by 2030, underscores this commitment. Evidence of incremental progress includes a 5 percent rise in per capita disposable income and a 4.4 percent increase in consumption expenditure. However, there remains substantial ground to cover. China's household savings rate climbed to an estimated 32.4 percent in the first quarter of 2024, up from the pre-pandemic average of 29.6 percent. In response, the government is directing more fiscal resources towards pensions, healthcare, unemployment insurance, childcare, and portable benefits for migrant workers within the context of domestic transformation. Enhancing household security and wealth would likely diminish precautionary savings, thereby bolstering sustained consumption. Likewise, embracing openness to foreign goods and services could foster greater demand for imports. Tackling the contentious issue of exchange-rate flexibility could facilitate this adjustment; a resultant yuan appreciation would augment Chinese households' purchasing power abroad. However, such adjustments must also occur internationally. I previously highlighted the trend of Chinese companies shifting from \"producing in China for the world\" to \"producing in the world, for the world.\" China's competitive edge can bolster overseas industries via joint ventures, technology transfers, and local-supplier development programs, thereby generating meaningful local value rather than merely assembling imported kits. Chinese expertise combined with employment and industrial capacity in Europe and other markets would yield substantial gains beyond the limited benefits of importing kits. China's trading partners should safeguard genuine strategic vulnerabilities permanently. Temporary and reviewable safeguards may provide time for industrial adaptation when import surges cause demonstrable harm. Transparency in subsidies, common environmental and safety standards, stronger competition rules, and negotiated market-opening commitments would address distortions more precisely than an indefinite ban on \"overcapacity.\" China has demonstrated openness to this idea, removing tariffs on imports from 53 African countries. Cooperation necessitates rebuilding trust. Instead of indefinitely restricting technology imports like ASML's chips, governments should ease technology and investment restrictions under clearly defined security concerns and verifiable safeguards. Such concessions would create opportunities for businesses on both sides.",
  "summary": "The European Commission is pressing China for progress by next month to address the widening EU-China trade imbalance, and raising the possibility of new protectionist trade policy. The deadline raises a question: how should China and its trading partners address perceived economic imbalances while sharing the benefits of Chinese industrial competitiveness? China’s merchandise trade surplus…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 2,
    "also_reported_by": [
      {
        "outlet": "South China Morning Post",
        "title": "China’s industrial strengths must also benefit its trading partners",
        "url": "https://urgent.news/2026/09/24/chinas-industrial-strengths-must-also-benefit-its-trading-partners",
        "published": "2026-09-24T21:30:12.000Z"
      }
    ]
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}