According to a May 28 report by The Wall Street Journal, faced with the dual pressure of continuously rising tariffs from Western countries and weak domestic demand, a growing number of Chinese manufacturers are relocating their entire production capacity overseas, building their own or joint-venture factories in Eastern Europe, South America, and North America. Products cover many categories including home appliances, automobiles, batteries, and steel. Specific cases include: the Barcelona factory of Spanish historical automaker Ebro resumed operations after attracting Chinese investment; multiple Chinese white goods manufacturers set up production bases in Eastern Europe to avoid EU tariffs; and electric vehicle makers such as BYD and Chery accelerated factory construction in Brazil, Hungary, Thailand, and other places. Trump and Xi Jinping agreed earlier this month to establish a bilateral „Investment Council,“ which is seen as a signal that may attract more Chinese companies to directly invest in the United States. Some analysts expect discussions about building factories in the U.S. will accelerate accordingly.
However, concerns in host countries follow. A report released by the Bruegel Institute in January this year pointed out that between 2019 and 2025, European imports from China surged by more than 40%, reflecting the systemic feature of Chinese companies, under the „involution“ pressure of continuously narrowing domestic profit margins and a surge in loss-making companies, dumping production capacity into overseas markets with extreme cost control. Host governments and local manufacturers generally worry that Chinese companies will replicate the domestic „price involution“ model locally, squeezing profit margins and impacting local employment. A research report commissioned by the European Parliament in March this year has listed this phenomenon as a structural trade risk, calling on the EU to introduce special industrial protection policies. Some emerging market countries are also beginning to follow developed economies, conducting anti-dumping investigations or imposing tariffs on specific Chinese manufactured products.