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Current Affairs

China’s next export is the world’s factory itself

China’s export boom is reaching its limits. The country’s next phase of growth will come not from shipping more goods abroad, but from exporting its…

By Samantha Johnson / August 1, 2026

China’s export boom is reaching its limits. The country’s next phase of growth will come not from shipping more goods abroad, but from exporting its factories, technologies and brands.

China is running up against the limits of its old model. It is obvious as the economy looks increasingly K-shaped. Weak consumer confidence and a prolonged property slump continue to sap domestic demand, forcing manufacturers to rely ever more heavily on overseas markets. Exports have become the Chinese economy’s strongest economic engine just as growth at home has faltered.
However, that approach is nearing its limits, despite China having shipped a record number of cars in June. That’s because such export growth is increasingly unwelcome in many countries. France and Germany, for instance, agreed recently to pursue tougher European Union trade safeguards, as advanced economies become less willing to absorb Chinese overcapacity.
For governments hoping tariffs will rebuild domestic industry, China’s next move will leave them disappointed. Levies can slow imports but not if China builds its factories overseas.
Recent economic data shows why China needs to change course. Its gross domestic product has expanded at the slowest rate in years, growing just 4.3 per cent year on year in the second quarter. Exports surged by 27 per cent in June, but retail sales were up just 1 per cent. Real estate investment plunged by 18 per cent in the first half.
This uneven growth reflects the K-shaped economy, and slowing growth is at the top of Beijing’s agenda. On Thursday, the Politburo promised stronger macroeconomic support and a faster pace of fiscal spending, underscoring policymakers’ determination to find new sources of growth as the old model loses momentum.

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