In 2025, China’s economy grew by 5%, adding nearly one trillion USD to its GDP. The composition of growth, however, has shifted. Net exports increasingly underpinned overall growth, supported by strong export performance in ASEAN markets, while consumption remained the largest contributor, albeit at a subdued level. At the same time, advanced-manufacturing products rose swiftly in China’s export rankings, displacing traditional labour-intensive goods among its leading exports.

This shift reflects a deeper labour force transformation. China’s college-educated population is projected to more than triple between 2010 and 2030, exceeding 300 million even as the total population declines. As skilled labour expands at this scale and its relative cost falls, China’s comparative advantage is moving rapidly towards advanced manufacturing. Amid weak domestic demand and rising trade tensions, however, predictable trade relations and rules-based frameworks become increasingly important for sustaining the expansion of skill-intensive production and employment. Chapter 1 examines these dynamics, including a sub-national dissection on trade, skills, and demographics across China’s coastal regions.

Chapters 2 and 3 show that provincial growth has converged around 5–6%, but economic activity and competitiveness remain concentrated along the eastern seaboard, particularly in the Yangtze River Delta and Greater Bay Area. Inland economies are contributing more at the margin, yet domestic demand and external balances remain uneven, while lower-ranked regions continue to cluster in western and northeastern China. Financial Depth, Business Efficiency, and Manpower Conditions remain the main differentiators. Simulations indicate that the greatest scope for improvement lies in middle- and lower-tier regions, where raising the weakest indicators to the national average produces the largest simulated gains.

Against this broader spatial pattern, Chapter 3 turns to how advanced manufacturing is organised within China’s leading regions. Using firm-level data on publicly listed companies from Beijing, Shanghai, Shenzhen, and Hong Kong stock exchanges, it examines electric vehicles supply chain in Yangtze River Delta and semiconductors supply chain in the Greater Bay Area.

The analysis shows that, in the Yangtze River Delta, vertically aligned industrial policy, differentiated city-level specialisation, and cross-provincial coordination have produced a layered, region-wide electric vehicle ecosystem spanning upstream, midstream, and downstream activities. This structure limits unnecessary duplication while preserving strategic redundancy where resilience requires it. The Greater Bay Area’s semiconductor industry follows a different model: innovation-intensive Shenzhen anchors technological development, while Hong Kong contributes capital and access to foreign investment. This dual-engine structure has helped the region move up the global value chain despite more fragmented administrative arrangements.

Together, the two case studies show that advanced-manufacturing supply chains depend not only on technology and firm strategy, but also on institutional arrangements tailored to specific functional needs—whether through coordinated regional specialisation in the Yangtze River Delta or the alignment of R&D and investment capabilities in the Greater Bay Area.

Chapter 4 takes the analysis outward by first situating advanced manufacturing within the evolution of the WTO Information Technology Agreement (ITA) and China’s 15th Five-Year Plan. It compares China’s trade performance across products covered by ITA-1 and ITA-2 and those associated with a proposed ITA-3 frontier, showing that the fastest export growth is occurring in emerging advanced-manufacturing products not yet covered by existing rules.

The chapter then maps sub-national trade flows in integrated circuits, flat-panel display modules, lithium-ion batteries, industrial robots, drones, and 3D printers between major Chinese provinces and regional partners. The analysis reveals an increasingly structured regional network: Japan and Korea remain key upstream suppliers, ASEAN is both a major market and an important supplier, and trade is concentrated in Guangdong-led coastal platforms, with specialised inland nodes emerging in Anhui, Chongqing, Henan, Jiangxi, Shanxi, and Sichuan.

Building on this mapping, Chapter 4 then turns to the policy frameworks needed to sustain these regional trade networks. Its empirical analysis shows that the expansion of the WTO ITA helped cushion China’s high-tech exports during 2020–2024, a period of heightened uncertainty, while also stimulating imports and moderating trade imbalances. Rules-based plurilateral arrangements therefore function not only as market-access instruments for China, but also as stabilising mechanisms amid external uncertainty, tools for managing imbalances through broader market opening, and frameworks that support skill-intensive production and employment.

Overall, the volume shows how China’s growth model is being reshaped by the interaction of a rapidly expanding skilled workforce, the rise of advanced manufacturing, and persistent sub-national disparities. It traces these factors across provincial competitiveness, regional production systems, and sub-national and regional trade networks. The analysis ultimately points to a dual policy imperative: continued domestic institutional coordination to foster sub-national economic integration, and deeper rules-based plurilateral cooperation to stabilise and sustain market access, promote more balanced trade, and help shape China’s evolving role in the regional and global economy.

By YI, Xin