Because China has lost the massive buffer that the rest of The world was giving it by investing in it for free, transferring technology to China for free, building its industries for it for free, and in return being kicked out the moment the Chinese did not need them anymore.
This is just an unfalsifiable claim, devoid of empirical content. If you cite any of the numerous American companies with significant presence and revenue in China, say Starbucks, the reply will be that they are still there only because "China still needs them." But in what sense does China actually need Starbucks?
If the answer is "in the sense that Starbucks creates NNNN jobs and contributes to the Chinese economy", the exact same reasoning can be used to conclude that Chinese companies operating in the US are there only because "the Americans still need them." TikTok for example employs 11k Americans! Likewise, if the answer is "in the sense that Starbucks has something special to offer", the exact same thing can be used to conclude that Chinese companies (you can again use TikTok as an example) operating in the US are there only because "the Americans still need them."
In other words: 'need' can be taken either in a stricter or in a looser, watered-down sense. In the stricter sense, it's simply false that American companies are kicked out the moment China no longer needs them. Case in point: Starbucks, which is not strictly needed, but not kicked out either. Conversely if you take 'need' in the looser sense, foreign companies in any country still operate there only because "the locals still need them," and there's nothing unique about China's situation.
If you're overproducing yet there is limited ability for domestic consumers to put these products, this means you are dependent on foreign trade partners.
Yet even these trade partners are forcing Chinese players to manufacture in those markets or face high tariffs and revocation of MFN guaruntees.
There just isn't enough spend on a quarterly basis to subsidize industries like EVs, Chips, etc industry without export - and most markets are only increasing the barrier of entry, or requiring domestic JVs.
Every EV, PV, Construction, etc JV that a Chinese manufacturer creates in countries like Mexico, Brazil, Indonesia, India, etc is an equivalent amount of jobs and domestic investment lost.
What's the point of being ahead if you're spending tens of billions yet most domestic consumers cannot afford them. This only kills domestic capacity long term (and is what Zhou Qiren has argued for years and why he was so prominent at the third plenum).
Edit: cannot reply below so replying here
Yet even with low prices, products are still relatively expensive. For example, auto loans tend to be limited to 36 months by banks to non-high income consumers. Assuming you get a 3.85% loan (as the current Chinese LPR is) to purchase the BYD Seagull (cheapest EV), even with a 50% down you are looking at half of the median monthly disposable household income (~$150/mo). The per capita Chinese household spends no more than $50/mo on transportation AND telecom according to govt stats [0].
And this is the crux of the issue - if most Chinese cannot afford most products, and foreign markets are increasingly adding tariffs where does all this stuff go?
[0] - https://www.stats.gov.cn/english/PressRelease/202404/t202404...
