"To revive its economic fortunes, China is flooding the world with cheap goods -- a multitrillion-dollar sequel to the China shock that hit global manufacturing more than two decades ago.
This time around, the world is fighting back.
The U.S. and European Union are threatening to raise trade barriers to Chinese-made electric vehicles and renewable-energy gear. Now, emerging economies including Brazil, India, Mexico and Indonesia are joining the backlash, zeroing in on Chinese imports of steel, ceramics and chemicals that they suspect are being dumped on their domestic markets at knockdown prices.
"China is too large to export its way to rapid growth," Treasury Secretary Janet Yellen said Friday in Guangzhou, her first stop on a trip to China in which she repeatedly warned her hosts against revving up its economy by churning out cheap goods. "And if policies are oriented only at generating supply and not also at generating demand, global spillovers will result."
Countries are taking steps to defend their manufacturers against an array of cut-price products. India alone has opened antidumping probes into everything from Chinese-made bolts and screws to glass mirrors and vacuum-insulated flasks. Argentina is investigating Chinese elevators. The U.K. is scrutinizing excavators and electric bicycles.
The growing resistance shows how the new China shock is stoking tensions in a global-trading system showing signs of fraying, because of sanctions on Russia and efforts by the U.S.-led West to boost domestic industries and untangle parts of their economies from China. The pressures risk accelerating a fragmentation of the global economy into countries determined to ease China out of their supply chains and those locked into its orbit.
"As the U.S. closes its border, China will be flooding the rest of the world with cheap goods. We are just seeing the beginning of it," said Arthur Budaghyan, chief emerging markets and China strategist at BCA Research in Montreal.
To offset an epic property bust, China's leaders are funneling investment toward the country's vast factory floor. Propped up by cheap, state-directed loans, Chinese firms are seeking buyers overseas for a ballooning surplus of goods they can't sell at home.
The trend has echoes of the Chinese export surge of the early 2000s estimated to have cost around two million manufacturing jobs in the U.S. -- a phenomenon economists labeled "the China shock."
For many of the world's consumers, cheap Chinese imports are a potential boon after a spell of intense inflation. China's manufacturing drive is also helping to cement its position as the essential low-cost supplier of cars, smartphones and machinery to much of the developing world. Its expertise in green technology offers countries a low-cost route to decarbonization.
But for China, relying on foreign demand for growth in a more hostile world is risky. Many economists say China should take steps to boost domestic consumption to create a more balanced economy.
"The world's capacity to absorb a new China shock is less than it was in the past," said Aaditya Mattoo, chief economist for East Asia and the Pacific at the World Bank.
The deluge of Chinese exports is swamping foreign competitors in some industries. Chile's top steel producer, Compania de Acero del Pacifico, said in March that it will stop operations at its Huachipato steel mill after executives said the mill couldn't compete with Chinese imports that were 40% cheaper than Chilean steel.
"Chinese companies are dumping. They've distorted the market," said Hector Medina, a union leader at the mill in the city of Talcahuano, 300 miles south of the capital, Santiago.
A government committee in Chile recommended tariffs of 15% on imports of Chinese steel after local producers complained they were being undercut. CAP pushed the committee to recommend a 25% duty.
Governments around the world have announced more than 70 import-related measures targeting China alone since the start of last year, according to a tally compiled by Global Trade Alert, a nonprofit based in Switzerland that supports open trade. That is up from about 50 in 2021 and 2022, though broadly in line with the typical number of measures China would face each year in the five years before the pandemic.
Include all interventions in which China is just one of several countries targeted, and the number for 2023 and 2024 together runs to more than 300. The measures include antidumping investigations, import tariffs and quotas.
"Normally priced products can't compete," said Prama Yudha Amdan, a spokesman for textiles firm Asia Pacific Fibers in Indonesia, where officials launched a probe last year into imports of synthetic yarns from China. The Jakarta-listed company reported $288.5 million in net sales for last year, down 27% from 2022 -- a decline Amdan attributed in part to perceived dumping by Chinese competitors.
China's response to the global backlash has been to decry rising protectionism, an indication it doesn't intend to change tack. State media has run articles excoriating Western complaints about Chinese industrial overcapacity as overblown and hypocritical.
More significantly, China has filed a complaint with the World Trade Organization over U.S. subsidies for electric vehicles, saying provisions that exclude Chinese components are unfair.
China's Ministry of Commerce and the State Council Information Office, which handles press inquiries for the leadership, didn't respond to requests for comment.
China has a wealth of options if it chooses to retaliate with trade restrictions of its own. It is a major buyer of commodities and a supplier of a huge range of components and materials used by other countries' manufacturers.
The breadth of products under scrutiny underscores how China's heft in global manufacturing has risen since the early 2000s, when Beijing revamped its economy and joined the World Trade Organization. Back then, China was churning out mostly low-end products and accounted for about 2% of global goods exports. Today, China accounts for nearly 15% of all goods exports.
"What frightens people about China's current trajectory is that as China upgrades, it is intensifying competition in both the middle-income and higher-income countries," said Simon Evenett, a professor of international trade at the University of St. Gallen in Switzerland." [1]
Global South, most of humanity, needs to switch to a sustainable economy for a reasonable price. The Global South does not have money to waste on pointless subsidies like we do. Global South are buying from China and Russia. We are cutting ourselves out from the future economy with our protectionism by further reducing our ability to compete. We need smart politicians to fix that.
1. China's Surge of Cheap Goods Spurs Ire. Douglas, Jason. Wall Street Journal, Eastern edition; New York, N.Y.. 06 Apr 2024: A.1.
Komentarų nėra:
Rašyti komentarą