China's Chip Boomtowns Widen the Gap With Its Struggling Industrial Heartland

China's economy is increasingly divided between the industries that supply the AI boom and those that are not part of it. In Hefei, the center of the country's memory-chip industry, factories can barely keep up with global demand for AI hardware, while in Changchun, the traditional home of gasoline-powered carmaking, officials acknowledged severe difficulties, a description later removed after it drew attention, according to The Japan Times.

The uneven domestic picture reinforces China's reliance on foreign markets. Even as parts of its economy struggle, Beijing continues to deepen commercial ties abroad. Indonesia and China reaffirmed their partnership in energy and climate action during a meeting reported by Antara, one of many efforts to expand Chinese trade and investment across the Global South.

A weak and unbalanced domestic economy leaves China dependent on exporting its manufacturing surplus, which sustains trade friction with advanced economies and exports deflationary pressure to its trading partners.