China's state-subsidized industrial policy has led to massive overcapacity, doubling its manufacturing trade surplus in five years and flooding global markets with low-cost goods. This new shock is characterized by a shift in exports towards emerging markets and a projected capture of 45% of global manufacturing capacity by 2030.
The U.S. is dangerously reliant on China for foundational components in critical sectors. This includes over two-thirds of the global market for printed circuit boards (PCBs) and up to 95% of key inputs for essential medicines like antibiotics and heparin.
Beijing is actively using its dominant position in supply chains as a geopolitical tool. The recent imposition of export restrictions on critical minerals like gallium, germanium, and graphite demonstrates a clear willingness to leverage economic dependencies to achieve strategic objectives.
Existing U.S. trade tools and policies are ill-equipped to handle the evolving nature of China's non-market practices. Challenges include addressing Chinese-owned production in third countries (e.g., Mexico), countering transnational subsidies, and fostering domestic demand for U.S.-made goods.
China is rapidly advancing in the biopharmaceutical industry, not just in manufacturing APIs but also in R&D and clinical trials. Chinese firms employ 30% of the world's most-cited life science researchers, and licensing deals involving Chinese biopharma assets surged 66% to $41.5 billion last year.
Keep pulling the thread on United States.