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Beyond Tariffs and Tensions

The global trade war that began in the late 2010s as a confrontation over tariffs has, by 2025, evolved into a deeper structural realignment. While much of the Western narrative focuses on protectionism, supply-chain security, and “de-risking” from China, The Economist’s recent leader article (October 23, 2025) makes a provocative claim — China is winning the trade war. Not through retaliation or rhetoric, but through methodical reconstruction of trade norms, institutional leverage, and long-term state-driven industrial strategy.

From WTO Entry to Dual-Circulation

To understand why China now appears to have the upper hand, one must revisit its economic evolution since its WTO accession in 2001.

Phase I (2001–2010): China integrated into global supply chains, offering low-cost manufacturing and efficiency.

Phase II (2010–2020): It began upgrading — investing in logistics, energy, and technology ecosystems while launching the Belt and Road Initiative (BRI).

Phase III (2020–2025): The “dual-circulation” policy emerged — balancing domestic demand with strategic export dominance — enabling China to shield itself from external shocks while maintaining export competitiveness.


By contrast, Western trade strategies largely remained reactive, focused on tariffs, sanctions, and fragmented policy coordination.

China’s Structural Advantage: Integration Over Isolation

The Economist highlights that China’s trade strategy integrates multiple layers of power — infrastructure, industrial policy, technology, and regional diplomacy.

1. Infrastructure Diplomacy: Through the BRI, China has built ports, railways, and digital corridors that now serve as arteries for global commerce — creating dependence rather than competition.


2. Industrial Strategy: State-backed firms dominate in key supply chains — electric vehicles, solar panels, semiconductors, and green technologies.


3. Export Orientation with Control: While Western nations struggle to decouple, China quietly moves up the value chain, embedding itself in production networks across ASEAN, Africa, and Latin America.

This three-tier model — production, logistics, and market capture — has effectively turned China from a “factory of the world” into a system architect of global trade.

Western Responses: Fragmented and Reactive

The Western approach — led by the U.S. — has relied heavily on tariffs, export controls, and investment screening.
While these moves aim to contain China’s technological rise, they have often produced unintended consequences:

Higher input costs for Western manufacturers.

Accelerated regionalization of Chinese supply chains (e.g., China+1 to Vietnam, Malaysia, or Mexico — still under Chinese capital control).

Reduced global coordination, as allies differ on how far to push economic containment.


Europe’s struggle to balance strategic autonomy with economic dependence on China’s green technology imports perfectly reflects this asymmetry.

The Geoeconomic Shift: China’s New Trade Architecture

By 2025, Beijing has moved beyond bilateral skirmishes to build its own trade architecture:

Digital Silk Road initiatives setting telecom and e-commerce norms across developing nations.

Currency diversification through yuan settlements and regional financial infrastructure like CIPS.

Regional mega-pacts such as RCEP, which further consolidate Asia-Pacific trade under Chinese influence.


This approach marks the emergence of parallel trade norms — not reliant on Western-defined institutions like the WTO or OECD, but driven by Asian integration and South–South cooperation.

Trade War 2.0 — The Era of Rules, Not Tariffs

The next phase of the trade war will not be fought through tariffs, but through rules, standards, and technology ecosystems.

China is investing heavily in standard-setting diplomacy — from AI ethics to green supply-chain protocols.

It is shaping regulatory convergence with partners in Africa, Central Asia, and Latin America — ensuring its products, data systems, and logistics platforms become the default choice.

The future battlefield lies in digital trade, rare earth governance, and AI-enabled supply-chain control — all areas where China’s integrated planning gives it a systemic advantage.


Western nations, by contrast, are still navigating short-term electoral cycles, making their responses fragmented and often inconsistent.

The Cost of Over-Centralization

However, China’s path is not without risks. Its state-dominant model faces challenges from debt accumulation, demographic slowdown, and global pushback against dependency. Yet, these weaknesses are partially offset by its ability to coordinate policy and production seamlessly — something democracies often struggle with.
The real test ahead is whether China’s control-oriented strategy can remain adaptive in a world that increasingly values transparency and digital openness.

A Redefined Global Order

The Economist’s observation is not about short-term victory but about structural dominance. China’s victory in the trade war, if it continues, will not be marked by export surpluses alone but by rule-setting power — the ability to define what global trade means in the next decade.

The West still commands innovation and soft power, but without coherent industrial and trade coordination, it risks ceding the architecture of globalization to Beijing. The coming decade, therefore, is not merely about trade flows — it is about who writes the rules of the new world economy.
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