China builds economic fortress as US trade pressure mounts: Report

China is making every effort to reduce its dependence on foreign products and technology, a key initiative under Xi Jinping to attain self-sufficiency amid rising trade tensions with the US.

According to The Wall Street Journal, Beijing is investing hundreds of billions of dollars in advanced manufacturing, electric vehicles, semiconductors, and artificial intelligence to counter Western trade restrictions and secure its economic future.

China tops global ship output

China has achieved remarkable success in the electric vehicle industry with domestic automakers BYD and Geely rapidly expanding their market share. In 2024, nearly 48% of all passenger vehicles sold in the country were electric or plug-in hybrids, totalling around 11 million units, the majority of which came from local manufacturers, according to The Wall Street Journal.

The country has also become the global leader in shipbuilding, now producing over half of the world’s merchant ships—a dramatic rise from just 5% in 1999. The country has shifted from being a net importer to a net exporter of chemicals, posting a $34 billion export surplus in 2024, a stark contrast to the $40 billion trade deficit recorded in 2020.

Self-reliance push

Xi Jinping formalised China’s push for self-reliance in 2015 with the launch of the “Made in China 2025” initiative. The program, outlined in a government document, emphasised the need for a stronger domestic manufacturing base amid a global technological revolution.

While the initiative aimed to upgrade Chinese manufacturing broadly, it prioritised 10 key sectors, including robotics, aerospace, and new-energy vehicles. It also set targets for increasing domestic production of core components and materials, backed by state subsidies and financial support.

US officials criticised the program as an attempt to sideline foreign firms, a dispute that deepened after Donald Trump took office in 2017. By 2019, under US pressure, Beijing stopped referencing “Made in China 2025” in official reports and expressed a willingness to involve foreign companies in its supply chain.

However, as US-China relations deteriorated further, China doubled down on its self-sufficiency efforts. The government’s 2021 five-year economic plan underscored the importance of technological “self-reliance” in an increasingly unstable global environment.

China reduced its reliance on US farm imports

Since the US and China imposed tit-for-tat tariffs in their trade war during Donald Trump’s first presidential term, Beijing has taken steps to reduce its reliance on American farm goods in a wider effort to bolster its food security.

In his first term, Trump slapped duties on $370 billion worth of Chinese goods. Beijing retaliated with tariffs of up to 25% on over $100 billion worth of U.S. products, targeting soybeans, beef, pork, wheat, corn and sorghum.

In the years since, the share of China’s soybean imports from the U.S. - the top American export to China - has dropped to 18% in 2024 from 40% in 2016, according to Chinese customs data, as China has turned instead to imports from Brazil, which has also replaced the US as China’s top corn supplier, according to news agency Reuters.

China’s agricultural imports from the U.S. fell to $34 billion in 2023, down from $43 billion in 2022, and are projected to decline further in 2024, according to Chinese customs data.

On October 25, 2024, China unveiled a 2024-2028 action plan aimed at advancing smart farming and precision agriculture to boost food production and the agriculture ministry hoped that China is on track to surpass a record 700 million metric tons of grain output in 2024.

Rising trade tensions & global impact

China’s rapid expansion in industrial production has resulted in a surplus of goods entering global markets, triggering trade restrictions from Western nations. The United States and the European Union have imposed tariffs on Chinese exports and restricted access to advanced chip technology to curb Beijing’s influence in critical industries.

At home, China’s push for self-reliance has come at a high financial cost, with industrial policies estimated to require around $250 billion annually as of 2019. Critics argue that prioritising manufacturing over consumer spending and social welfare programs could undermine long-term economic stability.

China pursues science dominance

Premier Li Qiang reaffirmed last year China’s commitment to strengthening self-reliance in science and technology, a goal first outlined by his predecessor, Li Keqiang. This push, which has heightened tensions between China and the West remained a source of friction.

China has increasingly emphasised state-led efforts to channel resources toward technological advancement. Since 2023, the ruling Communist Party has taken a more direct role in shaping tech policy following a major restructuring of the ministry overseeing the sector.

These efforts have yielded some progress, notably with Huawei’s unexpected launch of a new smartphone last August, which analysts believe features an advanced chip developed domestically despite U.S. restrictions.

Li highlighted quantum computing and life sciences as key areas China seeks to expand while also prioritising big data, commercial spaceflight, and artificial intelligence. He pledged to launch science and technology initiatives aimed at achieving strategic and industrial development objectives.