China asserts its economic model, rejecting Western critiques of overcapacity as it prepares for trade discussions with the US and EU.
China has drawn 'red lines' around its economic model, signaling policy continuity and rejecting Western criticism of industrial overcapacity ahead of trade talks with the United States and European Union, reported Reuters.
A Politburo meeting last week called for targeted support rather than consumer-focused stimulus, while the commerce ministry dismissed Western claims of overcapacity as protectionist. The party's Qiushi journal defended weak consumption as historically justified under China's investment-led model.
Analysts said Beijing's messaging shows growing confidence that it can manage disputes without major concessions. Xu Tianchen of the Economist Intelligence Unit stated that the stance sends signals of seeking mutual understanding while drawing boundaries.
Premier Li Qiang countered warnings of a 'China shock 2.0' by portraying exports as a 'China opportunity 2.0.' However, critics argue that China's reliance on exports amid weak domestic demand undermines claims that its products are a global benefit.
Washington's tariffs of more than 100 percent last year faltered as Beijing leveraged its dominance in rare earths. The EU, facing a trade deficit averaging US$1 billion a day, is pursuing its own industrial policies. German Chancellor Friedrich Merz has accused Beijing of keeping its currency undervalued.
Economists note that Beijing has slowed investment by tightening scrutiny on local government spending while pledging to end deflationary price wars. Qiushi acknowledged that weak consumption must eventually change, though structural reforms remain limited.
International studies warn that China's subsidies and overcapacity drive export growth. The OECD stated that nearly 60 percent of Chinese firms' market share gains stem from subsidies, while a Bank of Italy paper attributed 75 percent of export growth to domestic factors. McKinsey reported that China adds three times more productive assets annually than Europe and the US combined, with capital returns 40 percent lower.