China's industrial leap extends and takes market share from others
Summary
- China is undergoing a significant economic transformation, shifting from mass production to innovation-driven growth, focusing on high-quality and digital efficiency.
- Despite Western sanctions, China has accelerated its technological self-sufficiency, achieving a record-high foreign trade surplus and increasing exports of high-tech products.
- The *Made in China 2025* program has been successful, with 86% of its targets met, positioning China as a leader in fields like high-speed trains and solar panels.
- This transformation has created economic disparities, with traditional industries and workers facing challenges due to structural changes and rising technological demands.
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Automatic translation: Originally published in Finnish 26/05/2026, 04:30 GMT. Give feedback here.
China is currently in the midst of the most significant economic transformation in its history. The country, which for decades served as a hub for cheap mass production and assembly of foreign technology, is rapidly moving towards an era that the Beijing administration calls "new high-quality productive forces." This new industrial strategy is no longer based solely on investment-driven growth but on innovation, high quality, and extreme digital efficiency. However, it also faces challenges.
Although Western technology sanctions and trade barriers are designed to slow this development, the results have been the opposite. External pressure has acted as a catalyst, accelerating China's pursuit of technological self-sufficiency and domestic replacement in critical sectors. China's competitiveness is evidenced by the country's record-high foreign trade surplus. In a slowing global economic growth environment, the struggle for market share is intensifying. China is no longer exporting only bulk industrial products and clothing to the rest of the world, for example, to Europe, but increasingly intermediate goods and high-tech finished products, as indicated in an ECB article. Imports to Europe have continued to grow, but the flow of goods in the other direction has dried up, and China's exports to Europe have been declining since 2021.
Source: ECB
China's exports, change from previous year, %, 3-month moving average
Source: LSEG
The Made in China strategy is viable
The Made in China 2025 program, launched in 2015, aimed to support domestic manufacturing and invest in high technology. It has achieved its goals surprisingly effectively, despite Western efforts to suppress it. For example, South-China Morning Post research indicates that as much as 86% of the program's objectives have already been met. US sanctions not only failed to halt the program but also forced China to develop its own solutions in critical areas such as semiconductors and artificial intelligence.
China has already emerged as a global leader in several technological fields, such as high-speed trains, drones, and solar panels. This also demonstrates that China has successfully moved up the value chain, precisely in line with the Made in China objectives, transforming from an assembler to an innovator.
However, the technological leap has created a deep rift in China's economy. While the country reports a record trade surplus, traditional industries and their workers are being left behind by structural changes.
For example, as traditional toy factories close their doors due to dwindling demand and rising technological requirements, the consequences are severe for people and are reflected in regional unemployment, among other things. This is the flip side of China's new emergence: leading companies are thriving and automating, but the traditional working class is also struggling there.
