China's Economic Model Strains Under Trade and Domestic Pressures

China's economy is showing signs of stalling amid a record decline in investments, as trade tensions, supply chain disruptions, and domestic challenges converge to weigh on growth. The latest data and industry developments highlight a complex web of factors undermining confidence, from U.S.-China trade friction to sector-specific risks in mining and technology.

The U.S.-China trade war, which intensified in 2025 under President Donald Trump, continues to cast a long shadow over global markets. According to reports, Trump's imposition of 100% tariffs on Chinese imports and export controls on critical software, coupled with Beijing's retaliatory measures, has created a volatile environment. Recent de-escalation efforts, including a trade truce brokered in October after talks in South Korea, have provided temporary relief but failed to resolve deeper structural issues. For instance, China suspended retaliatory tariffs on U.S. farm goods while maintaining levies on Trump's "Liberation Day" tariffs. Meanwhile, U.S. officials signaled a willingness to delay a ban on Chinese tech firms, but ongoing disputes over rare earths and semiconductors remain unresolved.

Industry-specific challenges are exacerbating the slowdown. In the antimony sector, U.S. Antimony Corporation secured a $106.7 million five-year supply deal with a U.S. industrial fabric manufacturer, driven by Beijing's temporary suspension of antimony export bans. However, licensing requirements and geopolitical uncertainties-such as China's broader export controls on rare earths-continue to create supply risks. Similarly, the global automotive chip supply chain faces instability following the Nexperia crisis, where Dutch-China disputes over chip shipments have prompted Beijing to agree to talks with Dutch officials.

Domestic investment trends also reflect fragility. Lingong Heavy Machinery, a mining equipment maker, filed for a Hong Kong IPO to fund expansion but faces headwinds from its exposure to China's struggling real estate market. According to reports, the company's revenue from aerial work platforms-a segment tied to construction-plummeted 45% year-on-year in the first half of 2025, underscoring the drag from property sector woes. Meanwhile, SMIC reported that customers are delaying orders due to concerns over memory shortages, citing reduced market share in China.

Despite these challenges, some sectors show resilience. The range-extended electric vehicle (REEV) market in China is projected to grow to 3.2 million units by 2030, driven by stringent emission targets and government support. Chinese automakers like Leapmotor and Li Auto have embraced REEV technology, leveraging it as a bridge between traditional internal combustion engines and fully electric vehicles. However, this growth contrasts with broader economic stagnation, as investments in critical industries remain constrained by trade barriers and domestic demand weakness.

The interplay of external pressures and internal vulnerabilities raises questions about China's ability to sustain its economic model. While initiatives like the China-Africa Agricultural Science and Technology Innovation Alliance aim to diversify partnerships, the reliance on U.S. and European markets for key industries remains a double-edged sword.