The Ninth China International Import Expo (CIIE) has officially opened, with a notable speech delivered by Ding Xuexiang, Vice Premier of the State Council. His remarks have sparked significant public interest, particularly concerning the “China squeeze theory.”
On November 5, the grand opening of the Ninth CIIE and the Hongqiao International Economic Forum took place in Shanghai. During his keynote address, Ding Xuexiang refuted claims that the international competitiveness of Chinese products is primarily due to government subsidies. He emphasized that the notion of the “China squeeze theory” is baseless and asserted that China has “never deliberately pursued a trade surplus.”
He further stated that economic globalization is facing headwinds, highlighting the prominent issue of unbalanced global development and the severe impacts on international trade and economic order.
The “China squeeze theory” originated from an academic working paper published by the Peterson Institute for International Economics (PIIE) in the United States. It was systematically elaborated upon in mainstream Western media, including the magazine *Foreign Affairs*, on June 18 of this year.
The main arguments and data supporting this perspective from Western scholars and economists at the World Bank include the traditional economic theory that suggests when a country’s per capita GDP reaches a certain level and wages increase, it naturally “withdraws” from low-tech, labor-intensive industries such as clothing, footwear, and toys. This transition allows younger and lower-wage developing countries to claim market shares. However, data indicates that while the Chinese government pursues high-end manufacturing, it still maintains a significant share of the global exports of labor-intensive products.
At the same time, some scholars in Europe and America, along with certain economists from the World Bank, express concern that the absolute advantages of Chinese manufacturing in scale, logistics, and supply chain flexibility prevent local manufacturing industries in countries like India, Bangladesh, and some African nations from surviving in international competition. These countries have begun to see a contraction in the manufacturing sector’s contribution to GDP while their per capita income remains very low—often referred to as “premature deindustrialization.”
According to data from the General Administration of Customs of China, the trade surplus reached an all-time high of $1.19 trillion in 2025, marking a year-on-year increase of 20%. However, the trade surplus with the United States fell by 22.3% to $280.4 billion, while the surplus with the European Union increased by 15% to €360.6 billion.
This substantial trade surplus has exacerbated global concerns over China’s alleged dumping of low-priced goods. Western nations have accused the Chinese government of manipulating the market, which leads to unfair trade practices, including subsidizing domestic industries such as electric vehicles.
European industries have referred to the surge in Chinese exports as “China Shock 2.0,” asserting that the influx of Chinese goods has led to factory closures and job losses in Europe. A particularly alarming instance is Volkswagen’s announcement of plans to cut 100,000 jobs.
As Ding Xuexiang made these statements, China and the United States were preparing to embark on a new round of trade consultations, while trade tensions between China and the EU remained unresolved.
On November 4, France’s International Radio (RFI) cited a draft of a 2027 work plan, as reported by Rapporteur News, revealing that the European Commission plans to propose a “deterrence agreement” aimed at limiting China’s ability to exert economic coercion on the EU.
This document outlines the European Commission’s legislative agenda for the coming year, reflecting a response to China’s expanding trade surplus. This surplus has intensified industrial decline in various sectors in Europe, including the automobile and chemical industries.
The document states: “We will also strengthen the EU’s ability to address global macroeconomic imbalances by effectively utilizing existing tools and enhancing the EU’s toolbox to better tackle these imbalance issues; related initiatives include researching the formulation of a specific geoeconomic deterrence agreement.”
It has also been noted that the European Commission will begin developing a diversification tool, an idea first proposed in June, and aims to formally introduce it before the EU summit in December. The document indicates that this tool “will enhance our resilience and help accelerate the de-risking and diversification processes, thus reducing strategic dependencies that pose risks to EU economic security.”
In the current context of heightened geopolitical risks and increasing economic uncertainties, the EU aims to strengthen its single market, streamline administrative processes, modernize industries, and bolster its defense capabilities.
The European Commission underscored: “The EU must maintain its ability to carve its own path,” asserting that “independence is our primary mission for the European economy.” Given the delays in existing measures such as the EU “Industrial Acceleration Act,” the Commission is focusing its efforts on expediting the legislative work that is already in preparation.