On Tuesday, July 28, 2026, China issued a detailed rebuttal to allegations that it is enabling industrial overcapacity, responding to the United States and European Union's preparations for new tariffs and trade restrictions on Chinese imports.

The Chinese Commerce Ministry is attempting to rebrand what is termed "China Shock 2.0" as an opportunity for innovation rather than a problem. Meanwhile, Chinese companies reportedly receive subsidies up to eight times greater than their peers in OECD countries, a point that has drawn international scrutiny.

Despite these tensions, economic activity continues, with cars lined up for export at Shanghai's port as of July 14, illustrating ongoing trade flows. The backdrop includes the US administration under former President Trump, which has rebuilt a tariff wall imposing new rates on imports from 60 countries, including China.

This development comes amid broader debates over trade policies, subsidies, and forced labor tariffs, with China opposing US-imposed forced labor tariffs and calling for their cancellation.

Sources