On September 8, 2023, Chinese President Xi Jinping was on an inspection visit to a province in northeastern China. Heilongjiang is emblematic of old industries, a Chinese Rust Belt, far less dynamic than the Yangtze and Pearl River deltas. Here, as elsewhere in the country, the real estate market is also flagging. Much-needed infrastructure spending – a key driver of growth until now, along with building construction – has already been completed, and the central government has refused to plan new metro lines in Harbin, the provincial capital. In front of the most senior local officials, the general secretary of the Chinese communist party was going to present his concept for the future of the country's economy: "New quality productive forces."

Since then, the phrase has been repeated in numerous articles, in speeches at every lower echelon, and explained in the state media's "Xictionary." It's about better production, through technological progress and science, achieving breakthroughs in cutting-edge fields and producing more to drive the economy. The triptych of electric cars, batteries and solar panels is often cited as an example, as are semi-conductors, biotechnologies and the digital economy.

The problem is that despite the image of a new consumerist society, conjured up by Shanghai's shopping malls, the Chinese consume relatively little. China represents just under 18% of the world economy but only 13% of total consumption, according to the World Bank. Because most Chinese live on middle-country incomes, they are not truly very rich yet, and, lacking a sufficient social safety net, they save – just in case. The local market is not big enough to sell all of its production.

The solution: exports. But the world's second-largest economy is already the world's leading exporter, accounting for 31% of global manufacturing output, compared with "just" 20% in 2010. Doing more necessarily requires others to do less, to make room and to give up markets. "By shifting all this investment to manufacturing, we're boosting capacity in an economy for which demand is the problem, not supply. The only way to solve the equation is to export. That's why the rest of the world, the European Union [EU] in particular, is so nervous," said Michael Pettis, professor of finance at Peking University and research associate at the Carnegie China center.

The US has already begun closing the door and developing economies are not yet deep enough markets, some of which also have their geopolitical reservations, such as India. The EU is therefore at the front of the line. Brussels is due to report the findings of an investigation into Chinese subsidies to the electric vehicle sector later in 2024, which could result in the imposition of new customs duties. But Europe is not alone in its concerns: In early March, the Brazilian government opened an anti-dumping investigation into Chinese steel.

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