EURUSD On The Verge Of Correction, Buyers Losing Momentum

Blue River

Forex

Technical Analysis

Economic

Summary:

The EURUSD pair is correcting despite persistent pressure on the US dollar from weak macroeconomic data. Find out more in our analysis for 5 June 2025.

Despite weak US macroeconomic data, the EURUSD pair still struggles to break above the 1.1425 resistance level, indicating persistent seller pressure. EURUSD technical analysis points to waning upward momentum and an increased risk of a correction towards 1.1270.

The EURUSD pair is correcting despite persistent pressure on the US dollar from weak macroeconomic data. Find out more in our analysis for 5 June 2025.

EURUSD forecast: key trading points

●The ADP report showed the US private sector added only 37 thousand jobs in May

●The US ISM services PMI fell to 49.9 points in May

●The drop in ISM reflects a decline in business activity

●EURUSD forecast for 5 June 2025: 1.1270

Fundamental analysis

The EURUSD rate is showing a slight decline. Sellers continue to defend the key resistance level at 1.1425, holding back further upward attempts.

The US dollar came under pressure after disappointing macroeconomic figures. According to the ADP report, the private sector created just 37 thousand jobs in May, well below the forecast of 80 thousand, marking the weakest performance in two years.

Further downside came from the ISM services PMI, which fell to 49.9 in May, dipping below the 50 mark for the first time in a year, indicating contraction. This reading missed the 52.6 forecast and points to a sharp decline in new business amid rising resource costs.

EURUSD technical analysis

While the EURUSD rate maintains its upward trajectory, the failure to reach a new local high suggests weakening bullish momentum. Today's EURUSD forecast anticipates a potential breakout below the support level and a corrective move towards 1.1270. The Stochastic Oscillator signals a likely bearish turn, with its values rebounding from the resistance level, forming a downward reversal. A breakout below the lower boundary of the bullish channel will confirm the bearish scenario, with the price consolidating below 1.1355.

Source: RoboForex

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Musk’s Rebellion Against Republican Fiscal Plan

Elon Musk’s public opposition to the Trump administration’s flagship tax package marks a dramatic escalation in political tensions between the Tesla CEO and the White House. After personal lobbying efforts with House Speaker Mike Johnson failed to save the EV tax credits, Musk took to X (formerly Twitter), urging Americans to “KILL” the bill, warning that the legislation would “bankrupt America.” Musk described the bill as a “disgusting abomination,” aligning himself with GOP fiscal hawks like Representative Thomas Massie, who echoed concerns about long-term economic sustainability and Musk’s Mars colonization ambitions.

This rare public dissent from a billionaire donor and former Trump advisor has thrown a wrench into the Republican legislative push. The House-approved bill—estimated to increase deficits by $2.4 trillion over a decade—relies heavily on supply-side assumptions that tax cuts will spur enough growth to offset the cost, an argument the Congressional Budget Office does not fully support.

Backlash, Fallout, and Political Implications

Musk’s backlash has broader implications. His recent departure from the Department of Government Efficiency, a symbolic post intended to champion federal budget cuts, coincided with plummeting Tesla sales, tarnishing both his political and corporate brand. Musk’s credibility as an economic adviser within Trump’s circle appears diminished; Senator Roger Marshall bluntly stated Musk was “not important at all” in Wednesday’s GOP meetings.

However, Musk’s political clout remains formidable. As the top political donor in 2024—contributing over $290 million to Republican campaigns, including $255 million to Trump’s reelection—his financial influence is pivotal. Should he withdraw support in protest, the GOP could face significant setbacks in the 2026 midterm elections, where fewer than two dozen close House races are expected to determine control.

EV Industry at Risk as Credits Face Elimination

The heart of Musk’s frustration is the planned sunset of EV subsidies, which have played a crucial role in Tesla’s business model and the broader U.S. transition to clean energy. With Chinese and European automakers rapidly advancing their EV ecosystems and receiving strong state support, Musk views the rollback of incentives as a strategic misstep that could undercut American competitiveness in the green tech sector.

Tesla, already facing declining margins and intensifying price wars, may lose more ground without these tax credits, especially as legacy automakers like Ford and GM accelerate their EV lineups.

White House Defends Bill Amid Corporate Outcry

Despite Musk’s scathing critique, the Trump administration has stood by its bill. The White House released a statement calling the legislation a catalyst for “unprecedented economic growth,” maintaining that the tax cuts will pay for themselves. Speaker Johnson reinforced this message, labeling Musk’s criticisms as “dead wrong.”

Behind the scenes, infighting within the administration appears to have compounded the issue. Sources suggest that Musk’s prior conflicts with Presidential Personnel Chief Sergio Gor led to the withdrawal of Jared Isaacman’s NASA nomination, a move widely interpreted as retaliation tied to Musk’s diminishing influence.

Musk’s opposition to the Trump tax bill has created a rare and highly visible rift within the Republican establishment. His shift from the administration’s budget champion to one of its fiercest critics signals growing tension between fiscal conservatives, tech billionaires, and populist tax policy. With EV subsidies on the chopping block, budget deficits rising, and the 2026 midterms looming, the stakes of this political standoff could reshape not only economic policy but the future of America’s green technology leadership.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

China–U.S. Trade War

From Confidence to Caution: A Swift Sentiment Reversal

In what the Association of International Certified Professional Accountants (AICPA) calls a “clear pivot,” the confidence of U.S. business leaders has tumbled dramatically since the beginning of the year. After a brief post-election surge in executive optimism, recent data from the AICPA survey show a collapse in confidence, with less than a third of respondents maintaining a positive view of the economic trajectory. This marks a near 60% plunge compared to sentiment captured shortly after Trump’s re-election in Q4 2024.

Executives cited growing concern over trade policy volatility, specifically the uncertain fate of Trump’s tariff initiatives, as a primary driver of deteriorating sentiment. Although the administration paused many tariffs for 90 days, lingering tensions—especially with China—have cast a shadow over investment decisions. The President’s recent public accusations against Beijing for violating trade terms have exacerbated these concerns, further eroding confidence.

Recession Fears Intensify, Hiring and Profit Expectations Falter

The softening optimism is closely tied to mounting recession fears. One in five executives already believe the U.S. economy is in recession, and an additional 34% expect one by year’s end. Of those, 75% anticipate it will be moderate to severe in impact. Businesses are recalibrating accordingly: 86% are either delaying hiring or not hiring at all, and only 14% plan to expand their workforce immediately—down from 20% in Q1.

Profitability expectations have also slumped. Companies now foresee an average loss of 0.3% in the next 12 months, compared to a 1.7% projected profit in the previous quarter. Revenue growth expectations have dwindled to just 1%—the weakest outlook since the pandemic-crippled third quarter of 2020.

Executives Brace for a Tumultuous Year

Domestic economic conditions have overtaken inflation as the top concern among business leaders. Supply costs, leadership uncertainty, and stagnant or declining market demand round out the list of key risks. The volatility of Trump-era economic policy, particularly on taxation and trade, is amplifying these anxieties. Proposals to increase costs for international investors and stricter tax enforcement are seen as potential headwinds for capital inflows and global business operations.

This policy instability is reflected in corporate behavior. Mentions of “uncertainty” have spiked during earnings calls, with many firms suspending forward guidance entirely. The labor market is already reacting: private payrolls rose by only 37,000 in May—the slowest pace in two years, according to ADP.

The AICPA survey of 328 top-level executives paints a picture of a corporate sector turning inward, retreating from risk and growth initiatives. With geopolitical uncertainties, recession fears, and protectionist trade policies all converging, the early 2025 optimism has evaporated into cautious retrenchment. Unless trade tensions are resolved and macroeconomic signals stabilize, the U.S. may be headed for a year of subdued business activity, strategic belt-tightening, and muted job creation

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Commodity

Economic

Oil Market Sentiment Sours Amid Tariff-Driven Economic Risks

The International Energy Agency’s (IEA) latest World Energy Investment report forecasts that global oil investment will decline by 6% in 2025, reversing nearly a decade of steady growth. This shift reflects growing pessimism about future demand and oil prices, compounded by geopolitical friction — particularly U.S. President Donald Trump’s protectionist trade policies, which are dampening global growth forecasts. IEA Executive Director Fatih Birol attributes the downturn to a “sharp decline in spending on U.S. tight oil,” a reference to reduced capital flow into shale operations due to cost pressures and diminishing returns.

Crude oil prices have weakened under the weight of robust OPEC+ production and tepid global consumption. While initial projections anticipated flat investment in oil and gas, deteriorating sentiment and macroeconomic uncertainty have turned the outlook negative.

Upstream and Refining Investment Slows Sharply

Total upstream oil and gas investment is now expected to dip to just under $570 billion, a 4% decrease from 2024 levels. Of this amount, approximately 40% will be allocated to mitigating production decline at mature fields — suggesting limited capital is going toward new exploration or frontier assets. Refinery investment, a key indicator of future supply infrastructure, is expected to fall to a decade-low of $30 billion in 2025. This trend reflects both decarbonization efforts and stagnating global fuel demand growth, particularly in advanced economies.

Natural Gas Investment Holds Steady, LNG Surges

In contrast to oil, natural gas investment remains resilient. Spending in gas fields is projected to maintain 2024 levels, while liquefied natural gas (LNG) infrastructure continues to attract robust capital. The IEA notes that LNG investment is “on a strong upward trajectory,” driven by major capacity expansions underway in the U.S., Qatar, Canada, and other exporting regions.

This upcoming wave of LNG facilities — expected to come online between 2026 and 2028 — will mark the largest capacity growth in LNG market history. It signals a structural pivot in global energy trade, positioning LNG as a bridge fuel in both developed and developing economies transitioning toward cleaner power systems.

Strategic Implications: A Shift from Oil to Flexibility and Clean Energy

The declining trend in oil investment — alongside record-high global clean energy investment of $3.3 trillion projected for 2025 — highlights the growing divergence between traditional and emerging energy sources. With capital migrating toward renewables, energy storage, and digital infrastructure, oil’s long-term role in the global energy mix may be increasingly constrained to regions with competitive production costs or specific industrial demand.

The report also underscores that geopolitical instability, including trade tensions and supply chain fragility, is reshaping investment strategies. Companies are adopting a more cautious approach, prioritizing projects with quicker payback and lower risk exposure. As a result, even oil-rich nations and firms must contend with the reality of capital flight toward more future-proof technologies.

The IEA’s 2025 forecast signals more than just a cyclical downturn — it illustrates a structural pivot away from fossil fuel expansion and toward cleaner, more flexible energy systems. While natural gas and LNG remain resilient, oil’s shrinking investment base may foreshadow a future of tighter margins, increased volatility, and a redefined strategic role in the energy transition.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

1. Japan's base wages accelerate in April, supporting potential BOJ rate hike.

2. U.S. appeals court blocks Trump Administration's effort to dismantle Education Department, orders reinstatement of laid-off workers.

3. CBO: Trump's tariffs will reduce deficits but also drag on economy.

4. Fed Beige Book: Increased spending on tariff-affected goods.

5. Saudi Arabia pushes for OPEC+ to further "Significantly" boost production.

6. Bank of Canada holds rates for second straight meeting, signals possible future cuts.

7. U.S. President Trump: Powell Must Cut Rates Now.

8. Carney pauses retaliatory measures against the U.S.

9. U.S. services sector unexpectedly contracts in May as inflation heats up.

[News Details]

Japan's base wages accelerate in April, supporting potential BOJ rate hike

The acceleration in Japan's base wage growth is a positive signal for the BOJ, which is seeking opportunities to raise interest rates. Data released by Japan's Ministry of Health, Labour and Welfare on Thursday showed that base wages rose 2.2% year-on-year in April, up from a revised 1.4% increase in the previous month. Nominal wage growth came in at 2.3%, slightly below economists' expectations of 2.6%. A more stable wage indicator, which avoids sampling errors and excludes bonuses and overtime pay, showed that full-time employees' wages rose 2.5% year-on-year, marking the 20th consecutive month of growth at or above 2%. However, on the downside, real cash earnings fell 1.8% year-on-year, a larger decline than the market's expected 1.6%. The growth in nominal wages is a key component of the "virtuous economic cycle" long pursued by the BOJ.

As policymakers assess the future policy path, they are looking for more evidence that wage increases will drive demand-led price growth. If overall conditions permit, Thursday's wage data could support another BOJ rate hike this year.

U.S. appeals court blocks Trump Administration's effort to dismantle Education Department, orders reinstatement of laid-off workers

On June 4th (local time), the U.S. Court of Appeals for the First Circuit rejected the Trump administration's appeal, upholding a federal judge's ruling that requires the government to halt the execution of an executive order dismantling the Department of Education and reinstate employees who were laid off in a mass dismissal. Previously, the Trump administration had taken a series of steps to advance the closure of the Education Department, including large-scale layoffs. In March, Trump signed an executive order directing Education Secretary Linda McMahon to take all necessary measures to shut down the department and return education management authority to the states. The latest ruling means the Trump administration cannot proceed with its Education Department restructuring plan in the near term.

CBO: Trump's tariffs will reduce deficits but also drag on economy

On June 4th (local time), an analysis by the U.S. Congressional Budget Office (CBO) showed that President Trump’s tariff policies would reduce the deficit by $2.8 trillion over 10 years but would also lead to economic contraction, higher inflation, and reduced overall purchasing power for American households. According to the report, the CBO outlined in a letter to Democratic congressional leaders how the Trump administration's plan to impose broad tariffs on countries around the world would affect U.S. households. One projection indicated that American households would buy fewer goods from countries subject to the tariffs. Additionally, the CBO estimated that the tariff policies would raise the average annual inflation rate by 0.4 percentage points in 2025 and 2026.

Fed Beige Book: Increased spending on tariff-affected goods

The Federal Reserve's Beige Book noted that half of the districts reported slight to moderate declines in economic activity, three saw no change, and three reported modest growth. All regions highlighted elevated economic and policy uncertainty, leading businesses and households to hesitate in decision-making and adopt a cautious stance. Manufacturing activity edged down slightly. Consumer spending reports were mixed, with most districts indicating slight declines or no change; however, some regions noted an uptick in spending on goods affected by tariffs. Residential real estate sales showed little change, and most districts reported flat or slowing construction activity for new homes. Reports on loan demand and capital expenditure plans were varied. Port activity remained robust, but other transportation and logistics reports were mixed.

Saudi Arabia pushes for OPEC+ to further "Significantly" boost production

Saudi Arabia is pushing for OPEC+ to continue accelerating oil production increases in the coming months, as the kingdom prioritizes reclaiming lost market share, according to informed sources. Saudi Arabia, increasingly dominant within OPEC+, wants the group to raise output by at least 411,000 barrels per day in August and potentially September. One source said the kingdom is eager to unwind production cuts quickly to capitalize on peak summer demand in the Northern Hemisphere. OPEC+ has already agreed to boost output by 411,000 bpd in May, June, and July, though recent meetings revealed divisions over the strategy. A faction led by Russia favored pausing increases, but Saudi Arabia's stance ultimately prevailed.

Bank of Canada holds rates for second straight meeting, signals possible future cuts

The Bank of Canada held interest rates steady for a second consecutive meeting but suggested borrowing costs may need to be lowered if the economy weakens, while inflation remains contained amid the impact of U.S. tariffs. Policymakers led by Governor Tiff Macklem kept the benchmark rate at 2.75% on Wednesday, in line with market and economist expectations. Officials said they stood pat to assess the fallout from trade tensions with the U.S., which they called the "most significant downside risk" to Canada's economy due to its drag on exports and heightened uncertainty for consumers and businesses. Meanwhile, they noted that first-quarter growth exceeded expectations and pointed to a recent spike in core inflation measures.

U.S. President Trump: Powell Must Cut Rates Now

Following the release of the May ADP employment data, U.S. President Donald Trump declared that Federal Reserve Chair Jerome Powell "must cut rates now." He added, "It’s unbelievable—Europe has cut rates nine times." Earlier data showed U.S. private payrolls rose by just 37,000 in May, well below expectations of 110,000 and down from April’s 62,000. Hiring growth slowed to its weakest pace since March 2023.

Carney pauses retaliatory measures against the U.S.

Canadian Prime Minister and former Bank of Canada and Bank of England Governor Mark Carney stated that Canada will not immediately retaliate against the Trump administration’s decision to double steel and aluminum tariffs. He noted that officials from both countries are engaged in "intensive discussions" on trade relations. " Those discussions are progressing," Carney said, adding that the government will "take some time" to consider its response to the U.S. recently raising tariffs on foreign metals to 50%. He called the tariff hikes "unjustified, they’re illegal, they’re bad for American workers, bad for American industry, and of course for Canadian industry as well." Dominic LeBlanc, Carney’s cabinet minister overseeing U.S.-China trade talks, met with U.S. Commerce Secretary Howard Lutnick in Washington on Tuesday—his second visit to the U.S. capital in two weeks.

U.S. services sector unexpectedly contracts in May as inflation heats up

The U.S. services sector shrank in May for the first time in nearly a year, while input prices rose, signaling the economy may still face a period of sluggish growth and elevated inflation. The Institute for Supply Management (ISM) reported Wednesday that its non-manufacturing PMI fell to 49.9, dipping below the 50 threshold and marking the lowest reading since June 2024.

The new orders index dropped sharply to 46.4 from 52.3 in April, likely due to fading tariff-related front-loading effects. Service-sector customers reported inventories as too high relative to demand, which was a concerning sign for near-term economic activity.

Supplier delivery performance worsened further, with longer factory lead times indicating supply chain strains that could fuel inflation through shortages. Businesses are also seeking to pass tariff costs to consumers. The services input price index surged to 68.7 from 65.1 in April, hitting its highest level since November 2022. Most economists expect the full inflationary and employment impacts of tariffs to emerge in hard economic data this summer.

[Today's Focus]

UTC+8 20:15 ECB June Interest Rate Decision

UTC+8 20:45 ECB President Lagarde's Monetary Policy Press Conference

UTC+8 00:00 Fed Governor Kugler Speaks

UTC+8 00:30 Bank of Canada Deputy Governor Kozicki Speaks

UTC+8 01:30 Philadelphia Fed President Harker Speaks

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Energy

A Historic Surge in Energy Capital Allocation

The International Energy Agency (IEA) forecasts that global energy investment will hit a record $3.3 trillion in 2025, propelled largely by clean energy. This marks a significant structural shift in energy markets, as investment in renewables, nuclear power, and storage technologies is set to reach $2.2 trillion — more than double the expected $1.1 trillion in fossil fuel investments. The momentum underscores a global reallocation of capital, driven by climate commitments, falling technology costs, and policy support.

Fatih Birol, the IEA’s executive director, acknowledged the challenging macroeconomic environment, but emphasized that existing clean energy projects continue largely unaffected, even if some new project approvals face delays due to trade uncertainties and rising financing costs.

Solar and Batteries Lead the Energy Transition

Among clean energy categories, solar power is expected to be the biggest magnet for capital, with $450 billion in projected investment. This reflects solar’s maturity, scalability, and falling cost curve. Battery storage investment is set to jump to $66 billion — a necessary acceleration as energy systems integrate more intermittent renewables. Storage technologies allow power to be absorbed during off-peak times and released during demand peaks, helping grid stability and improving the economic viability of renewables.

Despite its importance, battery investment still trails behind solar and wind. However, as countries seek energy resilience and cost-effective decarbonization, storage solutions are likely to gain greater prominence in future capital flows.

Fossil Fuel Investment Declines as Structural Demand Weakens

Upstream oil investment is forecast to drop by 6% in 2025, the first contraction since the COVID-19 crisis in 2020. This decline is partly due to weakening global oil demand expectations and lower price assumptions, signaling a cautious pivot even within traditional energy sectors. The shift away from oil and gas investment suggests that fossil fuel producers are recalibrating in response to carbon constraints and the growing competitiveness of alternatives.

Still, fossil fuels continue to attract substantial investment, especially in regions where energy access or economic reliance on hydrocarbons remains strong.

Grid Infrastructure Emerges as a Bottleneck

One of the IEA’s most pressing concerns is the lag in grid investment, which remains at around $400 billion annually — significantly below what is needed to keep pace with generation capacity expansion. Without adequate transmission and distribution infrastructure, clean energy deployment could stall, especially in peak-load scenarios.

The gap is attributed to permitting delays, regulatory inertia, and supply chain constraints, particularly in sourcing transformers and cables. The IEA warns that grid investment must rise to parity with generation by the early 2030s to ensure electricity security and system reliability.

Regional Disparities and China’s Outsize Role

The investment landscape remains highly unequal. Developing economies, especially in Africa and parts of Asia, continue to struggle to mobilize capital for essential energy infrastructure. This imbalance threatens to exacerbate global inequality in access to affordable, clean power.

China, by contrast, continues to dominate, accounting for nearly one-third of global clean energy investment. Its leadership spans across solar panel manufacturing, EV production, and battery supply chains, reinforcing its position at the center of the energy transition.

The $3.3 trillion energy investment milestone signals a historic turning point, with clean energy no longer on the periphery but at the heart of global capital strategies. Yet systemic risks — from grid bottlenecks and geopolitical fragmentation to financing gaps in the developing world — could undermine progress. Policymakers, investors, and multilateral institutions must now ensure that the transition is not only deep and fast but also inclusive and infrastructure-ready.

Source: IEA

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

AI Integration as a Strategic Catalyst in Chinese Manufacturing

The integration of artificial intelligence into Chinese supply chains is no longer a futuristic ambition — it is already reshaping the country’s manufacturing landscape. As trade tensions prompt global firms to reconsider their sourcing strategies, China’s rapid embrace of AI, automation, and digitalization is creating a new competitive barrier: technologically superior supply chains that are faster, more precise, and increasingly self-reliant.

This shift is not anecdotal. Beijing’s recent Action Plan for Digital Supply Chain Development by 2030 outlines a national roadmap to embed AI, blockchain, and digital platforms into both manufacturing and agriculture. The government aims to cultivate at least 100 “digital supply chain leaders” by the end of the decade. At the enterprise level, companies like BYD, Zeekr, and Midea are already demonstrating applied use cases of robotics, autonomous mobile logistics systems, and generative AI.

Competitive Pressure and AI-Driven Innovation

Multinational firms and tech start-ups are feeding this momentum. Israeli firm Cybord, which specializes in AI-powered quality control, is expanding operations in China, citing Chinese factories’ eagerness to adopt machine learning tools that detect counterfeit or defective components. Cybord’s tools are now being integrated into Siemens’ factory management systems — a signal of China’s appetite for smart industrial partnerships.

According to Stanford University data, China installed seven times more industrial robots than the U.S. in 2023, capturing over half of all new global installations. This wave of automation spans multiple sectors, with the auto industry leading in implementation. BYD and Geely have moved decisively, deploying robotics in logistics and manufacturing to reduce labor costs and enhance production speed, while companies like Nio are investing in AI for battery and chip innovation.

Digital Leadership in Global Benchmarking

Karel Eloot of McKinsey highlights that 41% of the world’s most advanced digital manufacturing use cases — as defined by the World Economic Forum’s Global Lighthouse Network — are located in China. This includes not only domestic champions but also foreign multinationals operating inside the country, such as GE Healthcare, AstraZeneca, and Schneider Electric, which are leveraging China-based AI and automation to optimize global supply chains.

These developments signal a critical transition: China is not just the world’s factory; it is becoming the smart factory of the world. Generative AI is enabling faster design iterations, streamlined workflows, and predictive maintenance. Companies like Hisense-Hitachi are using it to minimize inefficiencies in team coordination and increase real-time responsiveness on factory floors.

Supply Chain Fragmentation and AI Inequality

However, this advancement comes with global consequences. While China races ahead in supply chain digitalization, many countries are struggling to keep pace, risking deeper bifurcation in global manufacturing capabilities. Jens Eskelund of the EU Chamber of Commerce warns that China’s push for technological self-sufficiency could trigger countermeasures from key trading partners, especially if access to high-tech markets and data becomes restricted.

Moreover, the sheer intensity of internal competition — marked by rapid price wars and relentless innovation — means that laggards will be quickly sidelined. This “AI arms race” in production processes is already making it harder for smaller or less digitally equipped economies to attract manufacturing investment.

AI is becoming the new strategic advantage in global trade. With robust public and private sector alignment, China is not only defending its manufacturing supremacy amid geopolitical tensions — it is reinventing it. As generative AI and robotics scale across sectors, companies seeking cost-effective, high-quality production will find it increasingly difficult to bypass China. In a world of tariff threats, rising debt, and fragmented trade blocs, China’s bet on digital infrastructure may well define the next chapter of global supply chains.