China’s Manufacturing Is Booming Despite Trump’s Tariffs

U.S. pressure has only cemented its rival’s status as the world’s indispensable factory floor, sending its trade surplus above $1 trillion

By Jason Douglas and Jon Emont of The WSJ. Excerpts:

"Chinese industrial production broke records this year as its factories churned out more cars, machinery and chemicals than ever before. Despite the disruptions of tariffs, the country’s trade surplus in goods has set a record, as growing shipments to Asia, Europe, Latin America and Africa offset the hit from Trump’s levies on direct sales to the U.S.

Chinese companies that built their business around low trade barriers to sell into the U.S. have adapted and in some cases are bouncing back."

"China reported a goods trade surplus of more than $1 trillion for the year through November, while manufacturing output in the first 10 months of the year was up 7% compared with the same period in 2024."

"The economy is battling an insidious phenomenon dubbed “involution,” in which cutthroat competition and ballooning industrial capacity are pushing down prices, profits and incomes."

"U.S. efforts to contain China’s economic and strategic ambitions and weaken its grip on essential global supply chains are falling flat. They might even be counterproductive, analysts and economists say, as Chinese policymakers conclude they need to dominate more industries to shield their economy from U.S. pressure and give them more chokepoints they can exploit"

"direct exports to the U.S. did take a hit from tariffs, falling about 19% over the same period. But the decline was more than made up for by sales to other regions, with exports to Southeast Asia up 14%, exports to the European Union up 8%, exports to Latin America up 7% and exports to Africa jumping by more than a quarter."

"Some of those exports probably found their way to the U.S."

"Average tariffs on Chinese imports are currently around 37%, according to the Tax Policy Center, compared with a rate of about 20% on Vietnamese imports"

"Chinese leader Xi Jinping is instead doubling down on a factory-powered future. A new five-year plan’s biggest priorities are supporting cutting-edge manufacturing"