While several countries are trying to negotiate to obtain concessions from Donald Trump in the global trade war the American president has sparked, China has taken a different approach.
Within 48 hours of Trump’s announcement of imposing tariffs, the world’s second-largest economy swiftly retaliated with its own punitive measures against goods and companies from the U.S.
And now it sends a clear message: China is ready to face a trade war and emerge stronger.
"U.S. tariffs will have an impact (on China), but the sky will not fall," as stated in an article published Sunday by the official Chinese Communist Party newspaper.
"Since the U.S. initiated the (first) trade war in 2017 - regardless of how the U.S. fights or pressures - we have continued to develop and progress, showing resilience - the more pressure we have, the stronger we become," writes the newspaper cited by CNN.
How China will respond
For decades, the world's largest car factory was Volkswagen's complex in the German city of Wolfsburg. But BYD, the Chinese electric car manufacturer, is building two factories in China, each capable of producing twice as many cars as in Wolfsburg.
Recent data from China's central bank shows that state-controlled banks have lent over $1.9 trillion to industrial debtors in the past four years. On the outskirts of cities across China, new factories are being built day and night, and existing ones are being modernized with robots and automated systems.
This means that the Chinese government is heavily investing in production. And China's investments and progress in production bring a wave of exports that threaten to cause factory closures and layoffs not only in the United States, but worldwide, writes New York Times.
"The tsunami is coming for everyone," said Katherine Tai, who was the U.S. Trade Representative under former President Joe Biden.
China accuses the U.S. of economic bullying
President Trump's high tariffs announced on Wednesday, which caused stock markets in Asia and elsewhere to drop, have been the most drastic response so far to China's export drive. From Brazil and Indonesia to Thailand and the European Union, many countries have taken more delicate measures to increase tariffs on Beijing.
Chinese leaders are furious at the recent proliferation of trade barriers, especially Trump's latest tariffs.
On Saturday evening, a presenter on Chinese state television solemnly read a government statement condemning the United States: "They are using tariffs to undermine the existing international economic and trade order," in order to "serve the hegemonic interests of the United States."
Beijing continued in the same tone on Monday, accusing the United States of economic aggression. "Putting the U.S. first in terms of international rules is a typical act of unilateralism, protectionism, and economic aggression," said Lin Jian, the foreign affairs spokesperson, according to The Guardian.
But Chinese officials are prepared to fight "bayonet-style" in the trade war sparked by Trump. They pride themselves on advantages such as high savings rates, long working hours by cheap labor, abundance of engineers and software programmers, as well as legions of electricians, welders, mechanics, construction workers, and other skilled craftsmen.
How China became unstoppable
China uses more robots in factories than the rest of the world combined, and most are produced in China by Chinese companies, although some components still come from imports. After several years of rapid growth, the installation of new equipment in factories has increased by an additional 18% this year.
Five years ago, before a real estate bubble burst, cranes building tower blocks were almost everywhere in China. Today, many of them have disappeared, and the remaining ones have stalled due to the real estate crisis. At Beijing's behest, banks swiftly shifted their loans from real estate to industry.
As new factories open, China's exports accelerate rapidly. They grew by 13.3% in 2023 and another 17.3% last year.
State-owned banks' loans also fund a boom in corporate research and development.
Huawei, a conglomerate that produces items as diverse as smartphones and auto parts, has just opened a research center in Shanghai for 35,000 engineers, which has 10 times more office and lab space than Google's headquarters in Mountain View, California, according to the NYT.
China has been increasing its share of global production for decades. The growth has come mainly at the expense of the United States and other traditional industrial powers, as well as developing countries. China's share at this chapter has reached 32%, up from 6% in 2000 and continues to rise.
China's manufacturing output is larger than the production of the United States, Germany, Japan, South Korea, and the United Kingdom combined.
America has long recognized the danger. Even before Trump won a second term in the White House, Biden administration officials warned in the last year of his term about China's industrial overcapacity. Consequently, Washington increased some tariffs on Beijing, especially on electric cars.
However, in the first three years, Biden administration officials focused mainly on stricter controls on exports for technologies like cutting-edge semiconductors, citing national security concerns. They kept in place tariffs of 7.5% to 25% that Trump imposed on half of China's exports to the U.S. in his first term.
It is uncertain how the American president's much tougher approach will evolve. Tariffs have slowed China's export growth but have not stopped it.
Other nations are on high alert for the possibility that Chinese exports could be diverted elsewhere, threatening the economies of long-standing U.S. allies like the European Union and South Korea.
New York Times cites the example of China's auto industry in this regard.
When the Chinese invasion is blocked somewhere, it spills over elsewhere
Blocked in the United States, Chinese auto manufacturers continued to build factories and directed their export campaigns to other countries.
Their sales have increased in Australia and Southeast Asia, taking market share from Japanese and American brands. In Mexico, Chinese auto manufacturers held only 0.3% of the local market in 2017; by last year, they had already surpassed 20%.
Rapid sales growth in the European Union and evidence of Chinese government subsidies prompted the EU last October to impose tariffs of up to 45% on electric cars from China.
But China is not just building car factories. In the past five years, for example, it has built a petrochemical refining capacity larger than Europe, Japan, and South Korea combined after World War II. And China is on track to build these refineries even faster this year.
Petrochemical products are then transformed into plastics, polyester, vinyl, and tires.
Beijing's tax revenues are declining, but military spending is rapidly increasing.
This has prompted the government to be cautious about spending on economic stimulus to help consumers. Instead, China has offset its real estate disaster through its export campaign, creating millions of jobs to build, equip, and operate factories.
And from there, Chinese products head to all corners of the world.