Is China making trade impossible?

China Translated - Briefing #65

The FT recently ran a widely shared column by Mr. Robin Harding, its Asia Editor, arguing that China is making trade “impossible”.

The column starts with a blunt question: What can the world still sell to China? Harding’s conversations in China — with economists, technologists, business leaders — all pointed to the same awkward answer: not much beyond commodities like soybeans and iron ore, which don’t help Europeans sleep at night. Some mentioned luxury goods, some mentioned higher education, and several even suggested that Europe should just let Chinese companies build factories there. But after running through all these options, Harding lands on a stark conclusion: “nothing.” Nothing that China truly wants to import, nothing it believes it cannot make better and cheaper on its own.

He does acknowledge, to his credit, that China still buys semiconductors, aircraft, advanced software, and high-end machinery — but then immediately frames China as the “resident doctor,” merely buying these goods until it can produce its own and eventually export them. And he concedes China’s insecurity caused by US export controls. All of this is reasonable analysis. Yet it leads him to a sweeping final diagnosis: “The only good solutions lie with Beijing,” because only China can fix its deflation, boost consumption, strengthen the renminbi, or curb industrial subsidies. The rest of the world, he argues, can only respond with either politically painful reforms that reduce welfare or protectionism.

This is where I think the framing needs a reset — not because Harding misses the right issues, but because he stops at exactly the moment the harder questions begin. He correctly identifies the pressures. But he underestimates the number of levers the West still has, and overestimates China’s ability (or willingness) to close every door forever. Most importantly, he jumps past the most basic principle of trade: if you want to sell, produce something worth buying. If you don’t, the customer goes elsewhere. Trade is reciprocal: you sell when your value is competitive; you buy when it isn’t. It’s astonishing how much geopolitical commentary often loses sight of this simple truth. Instead of complaining that the client no longer buys from you, maybe start by asking whether the product still holds up.

So let me offer three specific areas where the FT narrative — and much Western policy thinking — unnecessarily narrows the field.

First, high-end technology. Harding writes that China still buys the sophisticated machinery it cannot yet produce. Yet the column treats this like a temporary, fading opportunity. What it doesn’t ask is why these sales dropped so sharply: not because China lacks demand, but because Western governments blocked the supply. China did not lose interest in EUV lithography machines; it lost access. Nvidia did not decide China was no longer a customer; Washington did. If those controls are relaxed tomorrow, demand would be immediate. The FT frames China’s tech trajectory as inevitable; what’s equally inevitable is that the world’s top producers will always have products China cannot yet replicate - if they stay competitive. The opportunity remains — unless the West refuses it. Without a choice, China will be forced to develop its own competitiveness in these areas.

Second, services. The FT barely touches this, except for mentioning higher education. But services are precisely where Western economies are strongest. Tourism, creative industries, finance, legal services, management consulting, higher education, and design — these are not sectors where China has announced a national drive for airtight self-sufficiency. Yet instead of expanding service exports to China, many Western governments have spent the last five years discouraging them: higher visa barriers and suspicion toward Chinese students, restrictions on consultants working with Chinese institutions. China isn’t rejecting Western services; Western governments and institutions have been choking off their own exports.

Third, inbound investment. Harding recounts that several economists told him directly: Let Chinese companies build factories in Europe. And then — oddly — he drops the thread. Inbound investment is one of the cleanest, most direct ways to rebalance an economic relationship. If China buys fewer goods, let it buy more assets. Let it create jobs. Let it finance new industries. But recent cases suggest the opposite instinct. The Nexperia saga is a perfect illustration: a Chinese-owned semiconductor firm was forced to be taken over without a clear justification. I wrote about that earlier — the real message to Chinese investors was that even lawful, productive capital is politically unwelcome. Under these conditions, it’s hardly surprising that economic engagement shrinks. You can’t slam the door on someone’s investment and then ask why they aren’t contributing to your economic future.

By this point, I can’t help but sense that the undertone of FT’s article is that of condescension: you can’t be allowed to sell more than I do, nor can you be allowed to invest in my territory, because c’mon, how can you be better than us!

Harding does gesture toward the need for competitiveness: Europe needs reform, less regulation, more dynamism. That part is right. But he frames competitiveness as something Europe must pursue because China stopped buying, rather than as a way for any economy to survive in global competition. Competitiveness is not a reaction; it is a precondition. If China is manufacturing faster, cheaper, and higher-quality goods, that’s not an argument that trade is impossible — it’s an argument that Europe needs to sharpen its own game.

And this brings us back to the FT’s concluding line: that “the only good solutions lie with Beijing.” But the reality is far more mixed. Some solutions lie with Beijing. Others lie with Washington, Brussels, Tokyo — and with the companies in those economies. Relaxed export controls, expanded service openness, clearer investment rules, and improved competitiveness are all choices available to the West.

China is not making trade impossible. China is making trade harder for those who stopped trying.