At a time when the United States is witnessing a return to protectionism and the implementation of an economic policy aimed at making America great again (MAGA) and based on unilateralism, China, at the last meeting of the BRICS member countries, extolled the merits of globalization, multilateralism and win-win cooperation between countries. When Washington withdrew from the Paris Agreement and openly criticized international organizations, Beijing strengthened its participation in them by becoming more integrated into the World Trade Organization and strengthening its policy to fight climate change.
What might appear to be a paradox is in fact the consequence of the transformation of the Chinese economic model. Its growth had long resulted from the advantages conferred on its industry by a workforce with very low wages. Companies around the world, led by American groups, had relocated their production lines to take advantage of this and were re-exporting to their customers the finished products or spare parts that they would only have to assemble in the factories of their country of origin.
China is in the process of adapting to this new international environment and has chosen to transform its economic model with results that are largely underestimated in Europe and the United States. Growth remains high and above 5% since the beginning of the year, which is the government's target. Even if forecasts made by Western organizations predict a slowdown in 2026, to around 4.5%, this growth will remain more than two and three times higher than what is expected in the United States and Europe.
Inflation has been close to zero for almost two years and public debt is under control. At the end of 2024, it stood at 68.7% of GDP. This ratio includes loans from local authorities, including property developers, which are unlikely to ever be repaid. The Central Bank has reduced the volume of US Treasury bills in its foreign exchange reserves (down from 25.7 billion in July to 737.3 billion, the lowest level since 2009). But it favoured relative stability vis-à-vis the dollar and therefore depreciated by about 8% against the euro.
Despite these results, the unemployment rate in urban areas remains above 5%. Household consumption remains a support for growth, with increases in the first eight months compared to the previous year in sales of goods of 4.6% and 5.1% for services. On the other hand, the real estate sector is not recovering, due to the ageing of the population, with the increase in life expectancy and the decline in the birth rate, despite the abandonment of the one-child policy. The crisis still present in the major cities is the result of the failure of developers to take into account this demographic change, which is generating a sharp slowdown in the demand for housing and has therefore led to the accumulation of unsold properties.
Despite a very unfavourable international environment, foreign trade and investment in industry and public facilities are the main drivers of growth. Over the first eight months of the year, the volume of foreign trade reached 4,140 billion dollars, up 3.5% over one year. But this figure covers a sharp disparity between exports, which grew by 6.9%, and imports, which fell by 1.2%, which generated a surplus of nearly 800 billion dollars.
These trends, despite an increasingly tense international context, have accelerated significantly since the beginning of the year, but they also contain very strong disparities that give valuable indications of the changes underway in the Chinese economy. First, there is the beginning of a significant geographical redeployment. Over the first eight months of the year, trade with the United States fell by 14.4%, with reductions of 15.5% in exports and 11% in imports. With the European Union, expressed in dollars, the corresponding figures are +2.5%, +5.9% and -2.2%.
Conversely, trade with ASEAN grew by 8.6% with exports up by 14.4%. Even India, which had long had difficult relations with Beijing, but which had improved at the Shanghai summit, has joined the circle of its major trading partners. Trade grew by 10.4% and exports by Chinese companies by 12.8%. These different developments reflect the ongoing transformation of Chinese industry. It is increasingly able to sell its products in developed or emerging markets.
But that's not all. Its companies, like their Western competitors, have adopted relocation strategies, not to bring their production back to the country of origin but to serve hundreds of millions of new customers. To achieve this objective, they have production tools that integrate new technologies that they also export to their trading partners. Overseas sales of finished industrial goods and mechanical and electronic equipment have risen 9.2 percent since the beginning of the year and now account for 60.2 percent of China's exports, while labor-intensive exports, which had long been the spearhead of China's foreign trade, fell 1.5 percent in the same period.
The same shift can be found in companies' investment choices. Exports in three key sectors (computer services, aeronautics, automotive and capital goods, and data processing equipment) have increased by 34.1%, 28.0% and 12.6% respectively since the beginning of the year, which has offset the effects of the fall in investment in real estate. These choices have largely benefited the local industry since since the beginning of the year and compared to last year, the production of 3D printers, electric vehicles and industrial robots has increased by 40.4%, 22.3% and 14.4% respectively. So, for example, the number of vehicles exported in 2025 is expected to reach 7 million.
This transformation has not been at the expense of the fight against climate change, unlike the United States. The electrification of the country has continued with a massive use of renewable energies, with solar panels in the lead. Investments in the electricity grid have made it possible to connect these new sources of production located in the centre of the country to the major consumption areas in the east and south. This policy, together with progress in carbon capture to reduce emissions from coal-fired power plants, should contribute to the achievement of the country's objectives of stabilizing its CO2 emissions, and offer new growth prospects for these strategic sectors.
China has thus become a major industrial power. It has achieved this thanks to the research and innovation capacity of the hundreds of thousands of engineers and technicians it trains each year. The size of its domestic market gives it a decisive advantage, as does the profound change in consumer behaviour. In the past, owning a property with a foreign trademark contributed to the elevation of the social status of its owner. This situation is gradually disappearing.
To deal with this new situation, it is first necessary to be aware of it and then to find solutions to adapt to it. This is the challenge facing European industry.