On November 10, China and the United States officially implemented their respective tariff adjustments, marking a major turning point in global trade this month.
On one hand, the United States reduced the “fentanyl tariffs” on Chinese goods by 10% and extended the suspension period for imposing higher reciprocal tariffs on China to November 10, 2026, maintaining the current tariff rate of 10% during that time. On the other hand, China also halted additional tariffs on certain U.S.-origin goods, including cotton (15%) and soybeans (10%). Starting from the same date, China will continue for one year to suspend its previously planned 24% additional tariff on U.S. goods, retaining the current 10% rate.
The successful implementation of these major outcomes from China – U.S. economic and trade consultations is undoubtedly good news for companies expanding overseas.
However, looking across broader regions reveals that localized trade protectionism still persists. On November 13, EU member states reached an agreement to abolish the tax-free policy for small parcels valued under 150 euros. For years, such parcels have enjoyed duty-free entry into the EU, but that convenient door is about to close. This new tax policy—widely viewed as “targeting Chinese e-commerce”—will now take effect in 2026, moved up from the originally planned 2028.
This mix of positive and negative developments reflects the ongoing uncertainty and complexity of global commerce. For Chinese companies directly facing overseas markets, how can they maintain direction and strategic stability? Where will new drivers of growth come from? These questions are no longer just challenges for businesses—they are important issues for national and governmental consideration.
This time, ShineGlobal invited renowned economist，Professor Wang Xiaolu—Deputy Director of the National Economic Research Institute at the China Reform Foundation and Executive Director of the China Society of Economic Reform—for an in-depth dialogue on global trade shifts, government service capacity, and boosting innovation.
In the conversation, Wang Xiaolu emphasized that there are still abundant opportunities overseas; the key is to actively seek out opportunities that fit your own strengths. Throughout this process, competition, cooperation, and win-win outcomes should be the 3 keywords for Chinese enterprises going global. Although there are some positive signs in global trade, companies must be prepared for long-term challenges and pay more attention to diversified markets.
Meanwhile, Chinese enterprises have reached a stage where enhancing innovation capability is essential, and AI is the most critical driver of innovation. In the future, AI may take over 99% of human work and create tremendous value, which will inevitably lead to profound changes in employment systems and social security. What the government needs to do is to ensure strong institutional support for these transformations.
Vivi: Hello everyone, welcome to Enbonded Conversation. I’m Vivi from Shine Global. Today we’re very happy to have the renowned economist Professor Wang Xiaolu with us. We will be discussing where new growth drivers may come from amid the restructuring of the global economy, and how companies can adapt to the new landscape of globalization.
In recent years, the most intuitive feeling many people have is that the global economy is cooling down. From your observation, why have we entered such a state? Is it due to a structural adjustments, or is it just a short-term cyclical change?
Wang Xiaolu: From a global perspective, I believe that in recent years there has been a trend of de-globalization. Many countries are turning back to trade protectionism, engaging in trade wars, and building barriers. These protective measures, one could say, have their reasons. In the process of globalization, economies are competing with one another. In competition there are winners and losers; some fall behind. Each country may therefore adopt different policies. Some might turn to de-globalization. This indeed increases the difficulty of trade, economic cooperation, and mutual connections among countries.
Vivi: If this becomes a relatively long-term norm, what is the way out for companies?
Wang Xiaolu: Even though the de-globalization exists, including the recent U.S. policies of high tariff barriers—it doesn’t mean all opportunities are gone. There will still be plenty of opportunities. The key is that you need to find your own. You need to leverage your strengths and adapt to the conditions in different countries as much as possible, developing your trade and overseas strategies accordingly.
Vivi: It feels like a kind of “second growth” for many companies going overseas. They are forced to reorganize and take root again. Previously it was mostly about exporting goods; now it’s about establishing a local presence, being compliant, and adapting to policy changes. Although the global economy feels like it’s cooling, one very hot trend in China—aside from AI—is “going global.” But the environment is so difficult. How can these companies survive better?
Wang Xiaolu: Over the past few decades, China’s economic development has been very rapid. At the beginning of the reform and opening-up, China’s per-capita GDP was only USD 200. Now it’s USD 12,000. That is a remarkable growth. During this process, many enterprises—both new and old, adapted to the domestic environment to varying degrees. Think of the Earth as one big village. We are villagers in this global village. It’s good that we manage our own household well, but we cannot avoid interacting with other people here. We can’t just close the door and focus only on ourselves. If you look at the world economy as a whole, its scale and capacity are many times larger than the domestic market. So it is a vast space. Most Chinese companies are still unfamiliar with foreign markets. When you enter another country, you need to know: What is its legal system like? What is its business environment? What are its local customs and culture? How big is the market? What kind of products do people like to buy? What is the local industrial structure? You need to understand all this.
This is a process—companies expanding overseas need to adapt to local laws, regulations, and business environments. For example, some countries have very strict environmental requirements, or strict labor-protection laws like Mexico. Practices that you’re used to domestically may not work overseas; they may be inappropriate or non-compliant, and you’ll need to modify them. If you ignore these issues, you may violate local laws soon after entering the market and then it becomes very hard to continue operating. In some cases where laws are unclear, practices that are common in China may clash with local customs, causing misunderstanding or resentment. These are all things you need to focus on.
Vivi: Yes. People used to say that when Chinese companies entered a market, they wiped out the entire local industry because Chinese are diligent, smart, quick learners, and hardworking. In a way, this is also a reason for de-globalization. Especially now, some places are no longer welcoming Chinese companies.
Wang Xiaolu: That’s indeed an issue. You may have competitive advantages, but if you crush all the local businesses, that can easily lead to a situation where you become unwelcome.
Vivi: And that balance is very hard to strike.
Globalization is still worth a shot
Wang Xiaolu: I think that as a company investing overseas, you need to take these issues into full consideration. You should leave some room for local businesses to survive. Think about how to turn competition into both competition and cooperation—let them participate and let them also benefit, so that it becomes a win-win situation. In other words, I develop and you also develop; I have space and you also have space. Each of us can play to our strengths, and in some areas we can even complement one another. That can greatly ease many problems.
Vivi: Yes, nurturing the local ecosystem—being long-term oriented. I was talking to a Japanese entrepreneur last time. He said, “If everyone on this street sells tofu, then everyone’s price will inevitably be the same. If he sells this kind of tofu, then maybe we’ll make tofu skin instead.” In Japan, people naturally pursue differentiation—product differentiation. And they avoid engaging in brutal price wars; that’s unwelcome there. You’ve said before that for Chinese enterprises to grow, they need to stay closely connected with the world—go out, and move forward bravely without looking back. Overall, you sound very optimistic about Chinese companies going global. Why are you so optimistic?
Wang Xiaolu: After China’s reform and opening-up, we experienced more than 30 years of rapid growth. The domestic market kept expanding, domestic industries kept developing and strengthening, and the industrial system became more complete with better inter-industry coordination. This has provided strong competitiveness for Chinese enterprises. But in the past, we focused mainly on domestic development. When it comes to exploring overseas markets, seeking overseas investment opportunities, and operating abroad, many companies are still unfamiliar or insufficiently informed.
On the other hand, we are indeed facing some challenges at home. People talk about involution—everyone competing to offer lower prices, driving prices down. How did this happen? Partly because domestic industries have grown large, production capacity is strong, and efficiency has improved—so the market is no longer big enough for them. In the past, we pushed rapid growth through massive investment, but the expansion of the consumer market didn’t keep up. When production capacity expands but there aren’t enough buyers, you get oversupply. As a result, many industries face overcapacity—factories are built but lack sufficient orders. That drags down investment efficiency, turning investments into losses.
This is the problem we face domestically: people worry about not being able to sell their products, so they compete on price. There are deeper issues behind this. China’s consumption rate—the share of final consumption in GDP—has been around 56% in recent years. But globally, most countries are at about 70%–80%.
I believe China needs structural adjustments to achieve more balanced development, especially to address insufficient consumption. We should not always be thinking about how to boost this year’s or next year’s GDP growth. Over-reliance on investment leads to overinvestment. Macroeconomic policy needs a longer-term perspective so that China’s economy can develop in a healthier and more stable way.
Vivi: Yes. What you explained is the logic behind domestic “involution.” And now a new buzzword is “external involution”—because of domestic supply-demand problems, companies take the competition abroad.
Wang Xiaolu: This “external involution” is also a problem. If you don’t have differentiation—if you produce what I produce—when domestic competition isn’t finished, we start competing again in the same overseas markets. That’s not ideal. So companies need to pursue differentiated development instead of making the same products as everyone else. That would benefit everyone.
Vivi: The good news is, I’m seeing more companies paying attention to local needs, and looking for differentiation in each market: what do local consumers want? Instead of copy-pasting domestic models. This also leads to innovation—like Chinese robotics companies. Robotics isn’t just biped or quadruped robots; there are wall-climbing robots, wall-repair robots, all kinds of specialized equipment. This year at WAIC I was really impressed. At robot exhibitions in Germany, you might see just two or three companies, single-digit numbers. But in China, it’s full—robots for every scenario imaginable. With our supply-chain cost advantages plus innovation, I feel new positive changes are emerging. Another encouraging sign: I saw that the U.S. Senate voted to end global tariff policies. What do you think of this? Will the situation ease?
Wang Xiaolu: My feeling is: first of all, it’s a good thing. If the U.S. can withdraw from these policies in time, that would certainly be good. But since we haven’t seen detailed reports yet, we need to see what exactly they mean and how far they can go. I don’t really believe that Trump’s high-tariff policy will completely disappear. It’s impossible to return entirely to how things were before. Even before Trump took office, during Biden’s term there were still protectionist measures and various investment restrictions—especially unfriendly policies toward China. So we need to wait and see.
But in the long run, such policies harm not only others but also the U.S. itself. Inflation in the U.S. may already be a serious issue. The data doesn’t show it dramatically yet, but many people living there tell me that prices have risen sharply. It hurts ordinary people and is also unfavorable for many U.S. companies, because they import raw materials and components from abroad, and now these imports are more expensive and more difficult. That harms the U.S. as well.
Reflection and correction of such policies, I believe, is inevitable sooner or later. But we shouldn’t expect everything to go back to normal quickly.
Vivi: It sounds like this will remain the norm in the short term. If so, for Chinese companies going overseas—or companies developing domestically—how should they find new space? If U.S. companies themselves are struggling, then it will certainly be difficult for us as well.
Wang Xiaolu: Right. First, companies need to be mentally prepared for long-term challenges. Don’t think, “I’ll just wait for things to get better soon, this will all blow over.” It may not be that simple. Second, the world is big. If the eastern market doesn’t work, the western one might. If I have trouble entering the U.S. market, I can look elsewhere, to Europe; if not Europe, then Asia, Africa, Latin America.
Vivi: The global village—you can go to different parts of the village.
Wang Xiaolu: Exactly. The development of this global village is uneven. Your capacity may be excessive domestically and products may not sell at home, but in certain places they may be highly welcomed. If you find such places, you can find room to grow. Also, don’t remain unchanged—don’t assume that what you produce domestically is what you should produce overseas. Adapt to foreign markets; adjust your products; maybe even develop something new. That can bring new opportunities.
Vivi: We’ve seen categories that took off overseas last year and remain hot this year—like pool-cleaning robots, snow-removal robots, which are rarely used in China. And golf carts—also made by Chinese companies. They simply saw the overseas scenarios. Recently, a very popular AI hardware device clips onto the back of a phone to record audio and turn it into notes. Interestingly, it’s selling extremely well in Japan. I initially thought the U.S. would be its biggest market, but Japan has become a major market, and now it’s growing in Latin America—also a Chinese product.
Wang Xiaolu: So you still need to study and adapt to overseas markets. Put more effort into R&D, develop new technologies and new products based on market needs, or make improvements on existing technologies so they can meet different consumer demands. That way, your products will likely sell better.
Vivi: China’s innovation capability, especially with the rise of DeepSeek this year, has really shown that our AI innovation is strong. And after DJI went global, people also started to believe that Chinese products are high-quality products, no longer associated with “low-quality” stereotypes. That’s a big shift. In the past, I felt that Chinese companies, in global positioning and international competition, were still at a disadvantage. But in recent years, things seem to be changing. People are more confident going overseas. But when problems arise—such as changes in trade policies or tariffs—the government will often negotiate to resolve them. From a broader perspective, what other guidance or support do you think the government can offer to help companies navigate this “external involution” more steadily?
Wang Xiaolu: Yes, as you said, there’s a lot the government can do. In the face of this wave of Chinese firms going global, it’s not just about allowing or not allowing them to go out. The government should think more about how to provide services—how to help enterprises explore overseas markets and find investment opportunities abroad. There are many things that can be done: for example, providing information and consulting services regarding overseas markets, offering legal consultation, and helping companies defend their rights when they encounter problems abroad. When enterprises get into trouble and need to protect their legitimate interests, how should they navigate the local legal environment? Some companies may not understand these things. The government can study these issues and help companies defend their rights properly. These are all things the government can—and should—do.
Vivi: Yes. I’ve seen many provinces and cities start organizing delegations to lead companies overseas. When I was in Jeddah, Saudi Arabia, I saw the Shandong government bringing more than 100 companies to engage with local officials. I thought that was truly a positive move.
Wang Xiaolu: Moving forward, we need to think even further. It’s not enough to just take companies abroad to “have a look.” We need to consider what problems these companies will encounter overseas and how to help them overcome difficulties—how to provide better services.
Vivi: I was speaking with Professor Lin Xueping, and he mentioned that many Japanese companies operating overseas aim to expand Japan’s GNP, so they build very complete local support systems. For example, there are many Japanese schools—even in Beijing. But Chinese companies abroad are almost always fighting alone.
Wang Xiaolu: Right, the example you mentioned is very interesting. We can reflect on this by looking at how foreign companies coming to China operate. As you said, when many Japanese companies enter China, they bring supporting services—such as Japanese schools for their employees’ children. These are comprehensive support systems. We can learn from these experiences. They inspire us to think about how we can support Chinese enterprises abroad—by providing services and building support systems—so they too can develop better overseas.
Define Globalization with 3 words
Vivi: We’ve talked quite a lot about globalization. If you were to use three words to define the future of globalization, what would they be?
Wang Xiaolu: The three words that come to my mind are: competition, cooperation, and win-win. Competition is inevitable because we live in a market environment. A market is inherently competitive—those who perform better will grow faster. Enterprises with low efficiency, high costs, or poor management will naturally be eliminated over time. This is the source of progress. Without competition, there would be no improvement and no increase in efficiency. So competition is inevitable.
Wang Xiaolu: But within competition, you can still find a state where you both compete and cooperate, and where both sides share common interests. So even in competition, cooperation is essential. The global economy is essentially a large system of division of labor—you produce certain things, and I produce others. China has many strengths in manufacturing, but we also have weaknesses. For example, our service sector is not as developed, and even within manufacturing we have many shortcomings. What do we do then? We cooperate. When I buy your products, you are helping me.
So in the midst of competition, we should look for opportunities to cooperate and develop such cooperation as much as possible. And the result of that? The result is win-win.
Vivi: In the end, it’s still an interdependent relationship—you are part of me, and I am part of you. A form of co-existence.
Wang Xiaolu: Chinese people do have this strength: we are good at learning from others. And after learning, we can identify opportunities to further improve—that’s our advantage. So even if others start ahead of us, we learn, and after learning, we make improvements and can surpass them. But to stand at the very forefront of the world and lead global technological innovation—that’s something we still have not achieved.
Time to improve the Creatitivy
Vivi: This year at WAIC, I found it really interesting. At the same time, there was a hackathon in Hangzhou, and all the participants were high school students exploring robotics, coding, and various new possibilities. Including Professor Li Zexiang’s work at XbotPark Robotics Base, students start projects in college, and by the time they graduate, they have completed something tangible. These projects can then attract new funding and be combined with commercial prospects. I think this is a very encouraging development.
I was talking with a friend who used to work at DJI in Shenzhen and is now an entrepreneur. He told me that what DJI gave him was a belief in China’s innovative capability. China has the logic and SOPs to create truly innovative products. I feel that we are already seeing small sparks—or even broader waves—of investment and activity that are driving change.
Wang Xiaolu: China has indeed reached this stage. In the past, we started with the simplest labor-intensive products, learning bit by bit from others. Now we are moving into the field of technological innovation. I believe this is a very broad path waiting for us to explore.
Vivi: Exactly. Especially with such complete industrial support, an end-to-end ecosystem can be realized. If we add our innovation capability, the potential for a significant leap is enormous.
Speaking of innovation, we have to talk about AI. During this year’s Spring Festival, DeepSeek brought a lot of exciting news, and globally, AI has started to gain attention. From my perspective, because I’ve been following globalization and overseas markets, I’ve noticed that DeepSeek’s innovations, including intelligent robotics, have strengthened international interaction. Exchanges are now happening more closely—from Europe and India to the U.S.—in terms of technology discussion and collaboration. Do you think AI will accelerate changes in industrial structure?
Wang Xiaolu: My sense now is that we are on the threshold of a new, truly transformative industrial revolution. What does this AI revolution mean? It means that almost 99% of the work we can think of could eventually be replaced by AI, and it might even perform better than humans. Isn’t that a major industrial revolution? A huge leap forward?
Moreover, this will potentially multiply efficiency many times over and significantly reduce costs.
Vivi: Could AI become a growth engine for China’s economic development?
Wang Xiaolu: I think it will. But this depends on continuous innovation—finding its path of development. At the same time, it will bring very significant challenges.
Vivi: One last question: in the face of AI’s impact, what kind of preparations do you think we need to make?
Wang Xiaolu: From an economic perspective, countries have traditionally considered full employment as an important goal. The idea is: if the economy grows rapidly and more job opportunities are created, achieving full employment becomes easier. But in the future, if this situation changes—if many of the tasks currently done by humans are replaced by AI, which is highly efficient and creates enormous value—then people might only need to work two or three days a week. Many may even have no employment opportunities at all. What should we do to prepare for this?
At that time, we will need a very robust social security system. Preparation needs to start now. Given today’s conditions, we may soon face a larger wave of unemployment, so this system needs to be strengthened urgently. This is the government’s responsibility. The saying “prepare for a rainy day”—well, the rain is already here.
For enterprises and individuals, many changes are likely. Currently, the norm is to find a stable job—employment with a fixed income. In the future, this may change. Flexible employment might become more common. You might not work for a single company every day. Your employment could be elastic: some days busy, some days free. You might become a freelancer, breaking away from the fixed employment model.
Additionally, some previously clear concepts may blur. In the past, employment was typically paid work that created value, while unpaid activities—volunteering, hobbies like painting, music, dance—were clearly separated. In the future, these boundaries may become less distinct. There may be fewer fixed jobs, and at the same time, more leisure time to develop personal interests. Some of these activities could generate value. For example, you may teach based on your expertise, or research and explore ideas, which could bring returns.
Vivi: It sounds like there will be more “poetry and distant horizons,” while still generating value.
Wang Xiaolu: Exactly. AI will also create new value. More people will explore and innovate, and that innovation will bring new returns and value.
Vivi: That doesn’t sound so bleak—it actually sounds very promising. Thank you so much, Professor Wang, for your wonderful insights.