China pushes unified market to build economy for 2-front war

Chinese Premier Li Qiang’s latest push to build a “national unified market” signals a major effort to fortify the country’s economy against both internal fragmentation and external pressures, a move that could reshape global competition by creating an even more formidable industrial base. The initiative, discussed at a recent State Council executive meeting, aims to dismantle regional protectionism and standardize regulations to boost domestic circulation.

“The problem is not that Chinese firms are competing aggressively. It is that the rules of competition themselves have changed,” veteran adviser Ram Charan wrote in his book, China’s 90% Model. “Companies are no longer competing firm-to-firm. They are competing system-to-system.”

The policy directive comes as China’s trade figures show a complex picture. In the first four months of 2026, exports rose 11.3 percent year-on-year, but a 20 percent jump in imports suggests a robust and shifting domestic demand structure, according to customs data. This internal market consolidation is the bedrock of what Charan describes as the “90% Model,” where China builds capacity to meet the vast majority of global demand in key sectors, thereby gaining control over pricing and supply chains.

At stake is China’s ability to create a self-sustaining economic engine that is less vulnerable to geopolitical headwinds and trade disputes. By creating a seamless domestic market, Beijing aims to lower costs, improve efficiency, and foster national champions that can compete at a global scale, with further policy details expected to be finalized and released soon.

The ‘90% Model’ as Blueprint

The concept of a unified market is the domestic foundation for China's assertive global strategy. In sectors from solar panels and electric vehicles to pharmaceutical ingredients, Chinese companies have leveraged state support and massive scale to dominate global markets. According to Charan’s analysis, this is a deliberate, decades-long strategy where scale itself becomes a primary competitive weapon.

By breaking down the remaining internal barriers—such as varying local regulations and logistical bottlenecks—the State Council aims to unlock further efficiencies. This would allow companies to treat China’s 1.4 billion consumers as a single, integrated market, enabling production and distribution at a scale and cost that foreign competitors would find nearly impossible to match. The goal is to transform fragmented capabilities into an integrated, unbeatable whole.

Overcoming Internal Friction

Despite the top-down directive, implementation faces significant hurdles. The policy targets longstanding issues of regional protectionism, where local governments often favor homegrown companies, creating inefficiencies that have plagued the national economy for decades. As Charan has argued publicly, India must ‘smash bureaucracy’ to compete, an observation that applies equally to China’s own internal reforms.

The success of the unified market hinges on Beijing’s ability to enforce standardized rules across powerful provinces and overcome vested local interests. The lack of specific details and a clear timeline from the State Council meeting creates uncertainty around how this will be achieved. However, the high-level push from Premier Li indicates a renewed political will to tackle these deep-seated structural issues.

Global Implications and G7 Pushback

China’s internal consolidation is occurring in a tense global environment. A renewed push by some G7 officials to pressure China over “trade imbalances” and industrial “overcapacity” highlights the West’s growing anxiety. US Treasury Secretary Scott Bessent has argued for more protections against what he calls “a flood of cheap Chinese exports.”

However, this view is not universally shared within the G7. French Finance Minister Roland Lescure noted that overconsumption in the US and underinvestment in Europe are also contributing factors. This division may hinder a coordinated G7 response, but the narrative of China’s economic strategy as a threat is gaining traction. Beijing’s unified market push can be seen as a defensive move to build resilience, but it will likely be viewed by critics as an offensive strategy to further cement its dominance in global manufacturing.

This article is for informational purposes only and does not constitute investment advice.