A large amount of cheap Chinese exports have not only sparked resistance from developed economies such as the United States and Europe, but have also caused discontent among many developing countries, prompting them to implement countermeasures.
After China’s economic engine, the real estate industry, fell into crisis, authorities urgently turned to the manufacturing sector in an attempt to find an alternative engine to revitalize the economy’s fate. However, this has led to overcapacity, exacerbated by weak domestic demand in China. The Chinese government hopes to resell more surplus products to developing countries such as Indonesia, Brazil, and Thailand.
The Wall Street Journal reported that many developing countries are fighting back because cheap Chinese imports are putting pressure on factories in these countries, leading to job losses and hindering the development of the domestic manufacturing industry. Many poorer countries have long relied on expanding the manufacturing sector, believing it is the best way to promote economic development and enhance their international standing.
The current trend of China’s expansion of cheap goods echoes the “China shock” experienced by the United States and the global economy in the late 1990s and early 21st century. At that time, a flood of low-cost Chinese goods entered, leading to the loss of local manufacturing jobs. According to economists like David Autor from MIT and others, between 1999 and 2011, the U.S. lost over 2 million jobs due to imports from China. Many developing countries are now concerned about a similar replay of this situation.
According to the non-profit organization Global Trade Alert, since early 2022, developing countries have implemented nearly 250 trade defense measures affecting Chinese imports, including tariffs, anti-dumping investigations, and countervailing duty investigations. Brazil has taken over 120 intervention measures. The Brazilian government recently doubled the import tariffs on certain steel products like wires and cables, but the business sector is calling for a complete restriction on imports.
In India, officials have raised import tariffs on circuit boards, industrial lasers from China, and ethylene vinyl film used for making signs from other countries. India stated that competition from China is not only a problem for the domestic market but also squeezes the profits of emerging market enterprises overseas.
In October this year, Indonesia banned Temu, a cross-border e-commerce platform under Chinese e-commerce giant Pinduoduo. Temu could directly ship cheap goods from Chinese factories to global consumers’ doorsteps. The Indonesian government stated that this model brought risks of predatory pricing, making it difficult for Indonesian small businesses to compete.
Due to the loss of market share to low-cost clothing and textiles from China, Indonesian clothing manufacturers (including cottage industry producers and factories) have sought government assistance. Indonesia’s Trade Minister Zulkifli Hasan stated that the influx of imports has led to textile factory closures and massive layoffs, with the situation being critical.
According to the Nusantara Trade Union Confederation, from January to July 2024, at least 12 textile factories ceased operation, resulting in over 12,000 workers becoming unemployed.
Zulkifli Hasan announced at the end of June that tariffs of 100% to 200% would be imposed on Chinese manufactured products, with the policy effective immediately upon publication. He mentioned that the tariffs could affect imports of footwear, clothing, textiles, cosmetics, and ceramics.
The flood of Chinese export products has overwhelmed foreign competitors in certain industries. Chile’s largest steel producer, CAP, announced in March this year that it would cease operations at its Huachipato steel plant. Company executives had previously stated that the plant could not compete with Chinese imported steel that was 40% cheaper than Chilean steel. In April, Chile’s Ministry of Finance imposed temporary tariffs of 24.9% on steel bars and 33.5% on steel balls imported from China for six months, which might be extended pending the results of anti-dumping investigations conducted in Chile.
In September, South African President Cyril Ramaphosa, during a meeting with Chinese Communist Party leader Xi Jinping in Beijing, expressed his desire to reduce South Africa’s trade deficit with China.
According to the Bangkok Post, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) of Thailand stated in August that the influx of Chinese industrial products had impacted Thai trade, reduced Thailand’s market share in the region, and led to a trade deficit nearly worth $20 billion between Thailand and China.
Payong Srivanich, Chairman of the Thai Bankers’ Association, warned that without better protection from the government against Chinese products, more businesses could shut down. The most affected by the impact are local small and medium-sized enterprises.
Kriengkrai Thiennukul, Chairman of the Federation of Thai Industries (FTI), stated that in the first half of this year, about 667 factories closed — an 86.3% increase compared to the previous year, with an average of 111 factories closing each month. He urged the government to impose tariffs on certain Chinese products.
The Thai government implemented an emergency measure of imposing a 7% value-added tax on all imported products, changing the previous rules of only taxing imported products priced over 1,500 Thai baht (about $44). This policy is effective from July to December this year, aimed at giving the government time to study the issue and find more long-term solutions.
The widespread impact of cheap Chinese goods on developing countries has heightened tensions between China and the Global South, complicating Beijing’s plans to build international alliances. China has been seeking support from developing countries to establish its own alliances to counter the United States.