China is maintaining a firm stance on its economic model ahead of upcoming trade negotiations with the European Union and the United States, signaling continuity in its focus on advanced industries over consumer-driven growth. This posture reflects increasing confidence as global partners raise concerns about China’s large trade surplus and industrial policies.

President Xi Jinping and U.S. President Donald Trump plan further in-person discussions this year, while the EU has set an October deadline for resolving trade disputes with Beijing. Western governments criticize China’s approach as mercantilist and inconsistent with global trade norms, arguing that its emphasis on production over consumption results in cheaper exports that undermine manufacturing sectors abroad.

However, a recent meeting of China’s top Communist Party leaders underscored a preference for targeted support measures, rather than the consumer-oriented stimulus and structural reforms urged by international economists and trading partners. Earlier, China’s Commerce Ministry issued a position paper rejecting Western accusations of industrial overcapacity as biased and motivated by protectionist interests. The ruling party’s theoretical journal Qiushi also defended China’s relatively low consumption levels as a historically justified consequence of its investment-led development strategy.

Analysts interpret these messages as deliberate signals aimed both at fostering mutual understanding in trade talks and at drawing firm boundaries on policy change. Xu Tianchen, senior economist at the Economist Intelligence Unit, noted that while the statements stop short of an outright refusal to alter course, they clearly reject discriminatory trade measures against Chinese firms and products.

Chinese officials argue that their economic model suits a country still converging with advanced economies, pointing to significant recent improvements in product quality and investments in technology and science that could benefit global markets. Premier Li Qiang characterized concerns about a “China shock 2.0,” where Chinese companies displace Western competitors in high-tech fields, instead as an opportunity for global economic cooperation.

Nonetheless, experts caution that this narrative faces skepticism in countries impacted by Chinese exports. Eswar Prasad, a trade policy professor at Cornell University, highlighted China’s reliance on exports amid weak domestic demand as a factor complicating claims that its trade benefits global consumers.

The United States’ previous effort to curb Chinese exports through steep tariffs achieved limited success, partly due to China’s control of rare earth elements essential for many industries. Meanwhile, the EU, which ran a daily trade deficit with China averaging around $1 billion last year, is implementing its own industrial strategies and procurement policies to protect domestic markets. German Chancellor Friedrich Merz recently criticized China for maintaining an undervalued currency, intensifying pressure from European leaders.

Despite external criticism, China appears confident in its ability to navigate trade tensions without major policy shifts. Alicia Garcia-Herrero, chief Asia-Pacific economist at Natixis, noted that Beijing is applying “managed engagement” strategies similar to those used during the U.S. tariff conflict, buying time while maintaining a firm position.

Domestically, officials have tightened controls over local government spending to address investment-driven overcapacity, particularly in manufacturing and infrastructure. While acknowledging supply-demand imbalances and the negative impact of price wars, authorities have largely stopped short of endorsing broad structural reform. Qiushi’s recent commentary recognized the need for eventual change but suggested a gradual approach to avoid disruptive effects.

International research increasingly highlights the risks posed by China’s policies for both the global economy and its own growth prospects. A recent OECD report found that subsidies explain market share gains for nearly 60 percent of Chinese firms, while a Bank of Italy study attributed about 75 percent of Chinese export growth to internal factors such as weak consumption and excess capacity. A McKinsey Global Institute analysis also revealed that China adds productive assets at triple the pace of Europe and the U.S. combined, but with significantly lower capital returns.

Daniel Rosen, co-founder of research group Rhodium Group, observed that the frequency and formality of China’s defense of its economic model have intensified as evidence mounts of systemic domestic problems causing negative spillovers worldwide. As trade discussions with the U.S. and EU approach, Beijing’s emphasis on policy continuity and resistance to significant reforms underscore the complexities ahead in resolving these global economic disputes.