How China built its economic wall against the West

How China built its economic wall against the West

Long before US tariffs and restrictions began, China was already working to separate its economy from Western dependence. Over the past twenty years, Beijing has pursued an ambitious plan of economic self-reliance — reducing imports, replacing foreign technology, and building domestic industries across critical sectors.

This drive, sustained under both Hu Jintao and Xi Jinping, aimed to ensure that China could withstand future conflicts and trade disputes. It has been costly and sometimes inefficient, but it has created what Chinese leaders now call a “bulwark of economic security”, the New York Times reported.

When President Trump’s latest tariffs were announced, the intended pressure campaign met a China that had already prepared for it. The result: instead of being cornered, Beijing found itself with leverage — able to pressure the US economy while limiting Washington’s ability to block Chinese access to essential goods.

Self-reliance as a governing principle

Self-reliance has become central to Chinese policymaking. It was formally reaffirmed at last month’s Communist Party Central Committee plenum, where leaders laid out the next five-year plan. “We must first and foremost intensify efforts toward achieving greater self-reliance and strength in science and technology,” Xi Jinping declared.

This isn’t a new idea. For years, China has been replacing imported goods with domestic alternatives — from industrial equipment to pharmaceuticals and electronics. The emphasis on domestic production has antagonized trade partners but reduced the West’s leverage in disputes.

At the same time, Beijing’s policies have helped establish strategic choke points — areas where China dominates global supply, giving it tools to influence trade or retaliate in conflicts. The most visible example is rare-earth metals, where China controls almost the entire global market.

Rare earths and the power of control

In 2025, China’s rare-earth leverage became clear. Facing US restrictions, Beijing threatened tighter export controls on these critical minerals, used in electronics, weapons and renewable energy. The move prompted the Trump administration to soften its own stance — accepting a tariff compromise that left Chinese rates closer to those on Southeast Asia and below those on India and Brazil.

That same pressure also helped persuade Washington to pause a separate plan to expand its blacklist of Chinese military-linked companies. Beijing’s message was simple: supply-chain control can be a more powerful weapon than tariffs.

Beyond rare earths, China holds dominant positions in antibiotics, electrical equipment, low-end semiconductors, and many industrial materials. This control gives Beijing influence without confrontation — a network of quiet dependencies woven through global manufacturing.

The making of a manufacturing giant

China’s manufacturing self-reliance campaign dates back to its entry into the World Trade Organization in 2001, when it still relied heavily on imports for cars, telecom equipment and power generation. Since then, it has closed the gap with foreign producers, moving from imitation to global leadership in many industries.

Officials now claim China ranks first worldwide in the output of more than 220 of the 500 major industrial products. Sectors such as electric vehicles, solar panels and renewable technologies are examples of this evolution, built on a mix of industrial scale, state direction and cheap credit.

China’s state-controlled banks have financed this transformation, lending heavily to manufacturers at low interest rates and supporting mass production in strategic industries. The result is a country that now exports more of what it once imported — from solar modules to electric vehicles — and shapes pricing in global markets.

Tariffs, protection and the home market

Protectionist trade policies also helped China achieve self-reliance. Since 2008, high tariffs and taxes on imported cars more than doubled sticker prices, discouraging foreign purchases and forcing domestic innovation.

This shift also altered consumer behaviour. Because large gasoline cars were costly, Chinese buyers embraced electric and hybrid models early. Today, these vehicles account for more than half of the domestic market — and are among China’s top exports.

Such policies did not isolate China but rather redirected its consumption and production patterns toward self-sufficiency. The strategy ensured that when Western markets slowed or restricted access, domestic demand and national capacity could absorb the shock.

A planned economy with global reach

Beijing’s planners have used their industrial scale to strengthen national resilience. The Central Committee’s latest directive orders the country to “work faster to boost China’s strength in manufacturing, product quality, aerospace, transportation and cyberspace.”

The system combines central direction with vast industrial scope. In many sectors, American and European firms now lead only in the most advanced semiconductors and commercial aircraft — areas where China still relies on imports. Yet even there, Beijing continues to narrow the gap, smuggling and reverse-engineering chips and investing heavily in domestic innovation.

Xi’s administration views this process not just as industrial policy but as national security. Each layer of independence — from chips to energy to pharmaceuticals — is seen as protection against external coercion.

The political philosophy of resilience

Chinese leaders now frame self-reliance as essential for long-term survival. “A comprehensive industrial system benefits the enhanced resilience of supply chains,” Xi’s adviser Tian Peiyan wrote recently, calling it “a bulwark of economic security.”

That philosophy is rooted in the belief that Western countries can no longer be trusted as stable trade partners. The global environment, from tariffs to sanctions to technological restrictions, has convinced Beijing to deepen its inward-looking model while maintaining export strength.

Xi’s push for “high-quality productive forces” and domestic innovation reflects the same goal: ensure that China’s economy can keep running — and competing — even if cut off from the West.

The consequences for the global economy

China’s transformation leaves the United States and its allies with fewer options for economic pressure. When Washington considered new retaliatory measures, only a handful of US exports remained indispensable to China, such as aircraft parts. Meanwhile, Beijing’s manufacturing control has become global in scope, spanning industries that the world cannot easily replace.

This imbalance has changed trade dynamics. America’s tariffs may still hurt some Chinese exporters, but they no longer carry the threat they once did. And while China’s approach has alienated Western partners, it has also insulated its economy against external shocks.

The cost of that independence has been high: heavy public spending, overcapacity in key sectors, and a system reliant on constant state support. But to Beijing, those are acceptable trade-offs for a more secure economic future.

A world adjusting to China’s new reality

Two decades after it joined the WTO as an emerging manufacturer, China now stands as a self-contained industrial power. It controls the supply of crucial materials, dominates production in hundreds of product categories, and continues to push toward self-sufficiency in advanced technology.

Western economies face a new challenge: the tools they once used to influence Beijing — tariffs, sanctions, export bans — have lost much of their bite. China, meanwhile, continues to expand its manufacturing scale and refine its domestic supply chains, confident that its long-term plan has paid off.

The result is a reversal of global dependency. The West once supplied China with advanced goods and technology; today, it depends on China’s factories and materials. And that, more than any tariff or speech, marks the success of Beijing’s two-decade campaign for economic self-reliance.