Today, many Chinese enterprises have already experienced the impact of geopolitical competition between the United States and China. Whether selling products overseas, finding customers, or entering local supply chains, numerous companies have noticed a clear increase in institutional challenges such as tariffs, technological restrictions, security reviews, and market access barriers. Even some companies with advantages in price, quality, or technology face the challenge of an increasingly squeezed market space. As a result, corporate sentiment has grown increasingly pessimistic. There is now a belief that doing business in European and American markets, and indeed the entire global market, will only become more difficult.

Has the situation really become this serious? Given the challenges businesses face today, such pessimism is understandable. However, the key question is, to what extent will U.S.–China competition affect the sales of Chinese products in global markets?

ANBOUND’s founder Kung Chan has long maintained that industrial development in China over the past decade or more has formed manufacturing capabilities with genuine international competitiveness. In the realm of steel materials alone, these include advanced manufacturing capabilities for high-purity iron, various white-goods steel plates, and various automotive steel plates. In semiconductor materials, they encompass special gases and equipment. In power batteries, electronic products, and an expanding array of mechanical equipment, the advantages of Chinese enterprises are the combined result of cost, technology, engineering capability, scale, and supply chain efficiency. In the first three quarters of 2026, the country's exports of goods still grew by 16.4%. The September exports reached RMB 3.03 trillion, an increase of 29.6%. High-tech products remained a major source of growth. At least for now, the inherent competitiveness of Chinese manufacturing has not vanished because of U.S.-China competition. In reality, the primary problem is the institutional environment of the West, namely trade barriers. Through methods such as tariffs, export controls, national security reviews, and localization requirements, the U.S. and European nations have created substantial trade barriers, blocking Chinese products that could otherwise have entered U.S. and European markets through price, quality, and technological competition in normal commercial competition.

If the issue ended there, the result would certainly be self-evident. Information analysts would naturally not stop at this stage, as doing so would keep them at the same level as ordinary laypeople. Therefore, the deduction of this issue must continue. The question is, after erecting trade barriers, how much of an impact do Western countries face themselves, and what level of trade costs can they bear as a result?

A senior researcher at ANBOUND believes that the current high-intensity, broad-coverage trade barriers implemented by the West cannot be sustained for very long. The foremost reason is cost. The pressure of rising costs is currently rather obvious within the U.S. itself. In September 2026, the U.S. Producer Price Index rose 1.3% month-on-month, marking the largest increase in over four years, with gasoline and diesel prices rising by 20.3% and 21% respectively in a single month. Diesel is a vital foundational cost for American transportation, agriculture, and manufacturing, and U.S. freight prices have also risen significantly over the past year. Energy, logistics, labor, and financing costs collectively determine whether the U.S. manufacturing sector can genuinely form a production system with international competitiveness. Under these conditions, if the costs of imported components, equipment, and intermediate goods are further driven up through high tariffs, supply chain reorganization, and localization requirements, the U.S. may reduce the entry of certain Chinese goods into its domestic market through barriers, but it will simultaneously raise the production costs of its own manufacturing sector. Europe faces virtually the same problem, with even more pronounced energy constraints. For both the U.S. and Europe, both emphasize "reindustrialization", trade barriers are not free. They can temporarily protect domestic markets, but they simultaneously increase the costs for domestic enterprises to use raw materials, components, and equipment. The broader and longer these trade barriers persist, the greater the internal economic price that must be borne.

Second, trade barriers can only restrict a single market, but they cannot make the manufacturing capacity China has already built automatically disappear. After losing a portion of the U.S. market, the most natural reaction for Chinese enterprises is to seek new markets. According to the Global Trade Outlook and Statistics released by the World Trade Organization in March of this year, China's exports to the United States decreased by approximately USD 105 billion in 2025, while its exports to other markets increased by approximately USD 301 billion, an increase nearly three times the reduction. Among these, exports to ASEAN grew by 13.4%, to Africa by 25.8%, and to South America by 11.8%.

This shift will generate a reaction that Western manufacturing will inevitably have to confront. When the West blocks Chinese goods from its own markets, Chinese enterprises will focus more intensively on markets such as Southeast Asia, the Middle East, Latin America, and Africa. However, these same regions are also vital export markets for the manufacturing sectors of the U.S., Europe, Japan, and South Korea. The result may be that while the West reduces the competitive pressure of Chinese manufacturing in its domestic market, it pushes Chinese competition more intensively into the global market. Hence, trade barriers do not eliminate competition; they merely change where competition takes place. After gaining protection in their domestic markets, Western manufacturing industries may instead encounter even more intense price and technology competition in the global market.

Third, inflationary conditions in Europe and America are worsening, and any measure that drives up costs excessively will be unpopular and will encounter political challenges. With the U.S. mid-term elections approaching, the impact of gasoline, diesel, food, and daily consumer goods prices on residents' perceptions and political sentiment is even more direct. Trade barriers can garner support at a strategic level, but they ultimately must stand the test of the practical ledger of household living costs.

Fourth, employment and unemployment rates are crucial for politics. After Europe imposed trade barriers against China, data from the European Restructuring Monitor of Eurofound showed that between July 8 and October 16, 2026, approximately 180,000 jobs were cut, compared with about 38,700 newly created jobs during the same period. This means that in the large-scale restructuring events monitored by this agency, job reductions were roughly 4.7 times the number of additions. A survey conducted by the Munich-based ifo Institute at the end of September indicated that although employment expectations among German businesses improved slightly compared to August, the manufacturing and trade sectors still predominantly focused on cutting staff, with the majority of manufacturing companies continuing to plan personnel reductions. In September 2026, Volkswagen announced the global elimination of approximately 50,000 jobs, with about half likely in Germany, and management positions are planned to be cut by about a quarter. A Nuremberg automotive parts factory plans to eliminate 900 jobs by the end of 2029, equivalent to about half of the plant's workforce. Reasons include the decline in the fuel vehicle business, intensified Chinese competition, and the development of the European hydrogen market falling short of expectations. The situation in France is actually quite similar, where trade barriers have not delivered trade advantages, but have instead increased unemployment.

Based on this, ANBOUND's assessment is that the West's high-intensity trade barriers against China are difficult to sustain over the long term under the current cost structure, and will therefore loosen progressively over the next two years. This loosening will not be a return to past free trade conditions. Rather, restrictive measures that incur excessively high economic costs, are difficult to replace, seriously undermine domestic corporate competitiveness, and cause unemployment will be gradually “re-optimized" and "refined". It must be clarified that this process primarily targets product sectors where China already holds clear advantages in price and technology. For product categories where the West itself also possesses price and technology advantages, "Made in China" will find it difficult to penetrate Western trade barriers in those fields.

As Western trade barriers move toward refinement and trade policies undergo adjustments, related products from Chinese manufacturing are likely to regain more market space roughly two years from now. However, the method of re-entry may only partially involve direct exports from China. A larger portion will likely require more complex pathways through building overseas factories, local production, joint ventures and cooperation, and new trade public relations arrangements.

As it stands, the outcome will depend on the repositioning and restructuring of Western manufacturing itself. Establishing new factories, supply chains, labor systems, and industrial clusters to form cost and scale advantages capable of competing with Chinese manufacturing requires a certain amount of time for Europe and the United States. Meanwhile, the manufacturing scale, supply chain completeness, and engineering efficiency that China has already established will not naturally vanish within a few years. Therefore, ANBOUND further judges that Chinese manufacturing roughly retains an important window period of about a decade. This window period is not a dividend to be enjoyed passively, but rather a precious timeframe for enterprises to re-layout global markets, build overseas channels, advance localized operations, and further elevate technological standards. Chinese enterprises, whether state-owned or private, should not sit back and wait; this would mean losing this valuable window of opportunity for expansion in the world market.

Final analysis conclusion:

Under U.S.-China competition, the market pressures faced by Chinese enterprises are genuine, but concluding from this that "Chinese manufacturing is done" is inaccurate. On the one hand, Western trade barriers drive up their own production, energy, and consumer costs, increasing inflation and employment pressures. On the other hand, they compel Chinese manufacturing to pivot toward third-party markets, which in turn exacerbates competition for Western enterprises in the global market. Based on this, ANBOUND sees that the next two years or so will be an important phase during which trade barriers gradually loosen and move toward refinement, while the coming decade will likely remain an important window for Chinese manufacturing to recapture and position itself within the world market.