China is on track to set a new record for exports in 2025; Bloomberg even predicts a trade surplus of $1.2tn. This is due partly to China consolidating its dominance in sectors where it has historically had a competitive advantage (textiles, steel, smartphones), but also to accelerating growth in exports of green tech such as electric vehicles, solar panels and lithium ion batteries – the ‘new three’ products which Beijing believes will play a vital role in the global ecological transition (see China’s great green leap forward, in this issue).

The West attributes this strong performance to a strategy based on what former Canadian finance minister Chrystia Freeland in 2024 called an ‘intentional, state-directed policy of overcapacity’. aimed at boosting competitiveness by making it easier to dump surplus goods on international markets. According to this analysis, Western companies face unfair competition from a production apparatus cosseted by the Chinese government.

Yet six of China’s biggest solar panel and cell makers – Jinko Solar, Longi, JA Solar, Trina Solar, Tongwei and TCL Technology – are in the red after making a collective loss of $2.8bn in the first half of this year (Financial Times, 4 September 2025). Profits on electric vehicles have also fallen owing to a price war. BYD, which leads the Chinese EV sector and globally is neck-and-neck with Tesla, has negative working capital; its local competitors are faring still worse (Financial Times, 13 June 2025). Paradoxically, though production output and exports have risen, the companies involved seem to be growing weaker and, behind China’s apparent economic success, the survival of these strategic industries is at risk.

This is nothing new. Ten years ago Robert Boyer, a leading exponent of the regulation school of economics, was already describing the Chinese economy as being in ‘a permanent state of overinvestment’ with ‘cut-throat competition, declining (…)

Full article: 1 732 words.

(4) Speech, 1 July 2025.

(5) 14 July 2025.

(6) ‘The Political Bureau of the CPC Central Committee held a meeting to analyse and study the current economic situation and economic work’ (in Chinese), Xinhua, 30 July 2024.

(7) Ju Li, ‘Deeply understanding and comprehensively rectifying “involutionary” competition’ (in Chinese), Qiushi, no 13, Beijing, July 2025.

(8) Agricultural Involution: the Process of Ecological Change in Indonesia, University of California Press, Berkeley, 1963.

(9) National Development and Reform Commission and State Administration for Market Regulation, ‘Announcement on regulating disorderly price competition and maintaining sound market price order’ (in Chinese), 28 September 2025.