China’s latest economic numbers expose a contradiction that has been building for years. The country continues to dominate global manufacturing and expand its export footprint, yet the foundations of its domestic economy remain fragile. Strong overseas sales may keep factories running, but they cannot indefinitely compensate for hesitant consumers, a depressed property market and declining business confidence at home. The paradox is striking.

Exports are surging, driven by robust global demand for semiconductors, artificial intelligence infrastructure and electric vehicles. These are sectors in which China has invested heavily through industrial policy, technological advancement and economies of scale. They have enabled Beijing to retain its position as the world’s manufacturing powerhouse even as protectionist measures and tariff barriers proliferate elsewhere. Yet export success has begun to resemble a statistical cushion rather than evidence of broad-based economic health.

Domestic demand remains subdued, forcing manufacturers to absorb rising production costs instead of passing them on to consumers. Such a pattern inevitably compresses corporate margins, discourages fresh investment and ultimately affects employment and........

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