Egan-Jones Warns of Growing Risks from China's Strategic Industry Push

NEW YORK, Feb. 3, 2026 /PRNewswire/ -- Egan-Jones released an analysis examining the likely fallout from China's increasing focus on strategic industries and the implications for sophisticated institutional investors and risk managers.

The commentary explains that China's planned economy removes many traditional checks and balances and allows the state to reinvest its large trade surplus into industries it views as strategically important. The article notes that this approach is intended to support GDP growth and employment and is likely to have significant effects on global markets over the coming years.

According to the publication, several long held business assumptions are proving unreliable. The analysis states that in China, the state appears willing to disregard requirements for profitability and pricing above marginal cost in order to build and sustain industrial capacity. While claims of unfair practices continue to grow, the article notes that remedies take time and that industries can be hollowed out in the interim.

The commentary places these developments in historical context, referencing earlier partnerships between governments and commerce while highlighting that the scale and persistence of modern state support are unusual. It cites ongoing complaints that Chinese firms benefit from subsidized land, energy, and capital.

The article identifies a range of industries likely to face varying degrees of pressure, including aerospace, airplane manufacturing, artificial intelligence, automobiles, chemicals, computer chips, mobile devices, e commerce platforms, fusion energy, pharmaceuticals, quantum computing, shipbuilding, and software. It emphasizes that in many cases, the benefits of manufacturing are being captured in China even when much of the original design work occurred elsewhere.

The commentary also discusses potential offsets such as tariffs and currency adjustments, noting that while some corrective mechanisms are emerging, they are not occurring at expected levels and may prove difficult to implement effectively.

The analysis concludes that China's willingness to invest heavily and sell below marginal cost represents a paradigm shift with meaningful consequences for global competition and portfolio exposures. It expresses hope that the installment helps investors navigate an increasingly complex investment landscape.

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SOURCE Egan-Jones Ratings Co.