China’s ‘two-speed’ economy reshapes global trade amid US tensions
China’s economy is shifting towards a 'two-speed' model, according to a new US report. While state-backed industries remain strong, household spending stays weak. This imbalance is now reshaping global trade patterns.
The 2025 report from the US-China Economic and Security Review Commission highlights growing risks for foreign manufacturers. It warns of rising overcapacity, subsidised exports, and dumping from Chinese firms pushing into overseas markets.
China’s reliance on manufacturing and exports has deepened as domestic demand falters. The report notes that Beijing is flooding global markets with excess goods, often at artificially low prices. This surge threatens competitors in industries from steel to electric vehicles.
At the same time, Chinese companies are expanding into third markets to avoid tariffs. By offshoring production, they embed themselves deeper in global supply chains. The strategy helps bypass trade barriers while maintaining access to key materials and technologies.
The economic rivalry between the US and China is intensifying, driven by industrial policy and national security concerns. Both sides now use export controls and investment restrictions as leverage. Technology competition, in particular, has become a flashpoint, with each country tightening rules on critical sectors.
Despite these tensions, China presents itself as a dependable trade partner. The report argues, however, that Beijing often benefits from global trade rules it selectively ignores. This dual approach—promoting openness while shielding domestic industries—adds strain to the international trading system.
Analysts warn that unchecked Chinese exports could weaken US supply chains further. Key industries, from semiconductors to renewable energy, may face long-term vulnerabilities if current trends continue.
The report underscores a period of growing instability in global trade. China’s export-driven push and industrial subsidies are creating challenges for foreign firms. Without policy responses, the US and other economies may see deeper disruptions in critical sectors. The findings also highlight how technology and security concerns are now central to economic competition. Both Washington and Beijing show no signs of easing their trade restrictions in the near term.
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