In April, China’s trade data highlighted the increasing difficulty of Chinese goods entering the European and American markets, reflecting the current weakness of the Chinese economy. The trade data also showed that the export of products such as automobiles and electronic products was driving China’s economic growth, but these exports are facing resistance from Europe and America, indirectly indicating the urgent need for the leader of the Chinese Communist Party to visit Europe.
As of April, China’s exports to the European Union and the United States both decreased compared to the same period in 2024, even though overall Chinese exports grew by 1.5%.
The affluent European and American markets are crucial fortresses for China’s economic development and its most important markets. Data released by the General Administration of Customs of China on Thursday, May 9, showed that the export growth in April was driven by trade with Asia and developing countries.
The trade data in April revealed that it is becoming increasingly challenging to enter the European and American markets, with import growth of Chinese goods by Europe and America either slowing down or stagnating. Furthermore, China’s exports are becoming more dependent on the automotive industry, as automobiles have become a key export product driving China’s economic growth.
According to Chinese authorities, exports to the 10 ASEAN countries, including Singapore, Thailand, and Indonesia, grew by 6.3% in the period from January to April, exceeding $185 billion.
The total trade volume between China and ASEAN reached $307 billion, higher than the trade volume during the same period with the EU or the US.
In addition, China’s exports to Vietnam and Brazil both grew by over 20%, and the overall trade volume between China and Latin America increased by 8% year-on-year, reaching $161 billion.
At the same time, China’s exports to the EU declined by 4.8%, and exports to the US dropped by 1%. China’s imports from the EU also decreased by 5.3%.
The data indicates that the increase in exports in April was in volume rather than value. Chinese exports still rely on low prices to make progress, which is also related to the further depreciation of the renminbi.
Specifically, the export of products such as automobiles and electronic products is driving China’s economic growth. In the first four months of 2024, China’s automobile exports grew by 21% compared to the same period in 2023.
In terms of imports, driven by the import of high-tech semiconductors, China’s import volume in April grew by a healthy 8.4% compared to the same period last year. However, imports of food, coal, and cosmetics decreased year-on-year, indicating some signs of weakness in the overall Chinese economy.
With falling real estate prices, high youth unemployment rates, and tight monetary conditions plaguing China, the country’s economy is overall sluggish. There are concerns that Beijing is eager to rely on exports, especially of the “new three items,” to overcome economic difficulties.
The “new three items” strategy has raised international concerns, as governments worry that large amounts of cheap Chinese imports will pose risks to domestic employment and industries. The sharp increase in Chinese exports is reminiscent of the early 2000s when cheap Chinese imports destroyed some industries in the US and other countries.
Higher trade barriers will make it increasingly difficult for China to maintain its market share in Europe and America. European leaders are considering imposing high tariffs on Chinese-made electric vehicles and wind turbines based on new anti-subsidy laws, which could close off lucrative markets for Chinese companies such as BYD.
In addition, tensions between China and the US-led West have intensified due to Beijing’s close relationship with Moscow, as the war following Russia’s invasion of Ukraine directly threatens the EU.
Ursula von der Leyen, President of the European Commission, met with French President Macron and the leader of the Chinese Communist Party in Paris. After the meeting, she told the media that she had pressured Xi Jinping to curb domestic subsidies and excess manufacturing capacity in China, and urged more access for European companies to the Chinese market.
The concerns raised by the EU about the influx of Chinese goods into the European market were not acknowledged by Xi Jinping. According to the Chinese Foreign Ministry, Xi Jinping told Macron and Von der Leyen that there is no such thing as “excess manufacturing capacity in China.”
Mary Gallagher, a China expert at the University of Michigan, stated in her latest research that excess manufacturing capacity is part of a broader governance approach of the Chinese Communist Party, who tend to excel in “excessive production goals.”
Professor Lan Xiaohuan from Fudan University’s School of Economics and Yanmei Xie from Gavekal Research also stated in a report that excess manufacturing capacity is a carefully designed part of China’s industrial strategy aimed at boosting investment and stimulating competition.
By pushing for the export of the “new three items,” Beijing believes it can defeat Western competitors in these areas with low prices and subsidies, thereby increasing its market share overseas. Of course, the leader’s denial is not surprising. In the past, he has made many promises and statements during his visits abroad, but most of them have not been fulfilled.
The EU has initiated an investigation into Chinese electric vehicles under a new anti-subsidy law. In April, EU authorities also conducted surprise inspections at the offices of Nuctech, a Chinese security equipment company.
Moreover, concerns about Chinese spies, cyber espionage, and other forms of interference have been escalating. In April, British and German authorities arrested several individuals suspected of engaging in espionage activities on behalf of Beijing.
Noah Barkin, a senior consultant on China affairs at Rhodium Group, told the Wall Street Journal: “I think Europe has some leverage over China. The Chinese economy is currently weak.”
“China needs investment from Europe and European technology, but only if Europe is united and sends the same message will its influence on China be effective,” he emphasized.
Economist Gary Shilling, who successfully predicted the 2008 financial crisis, wrote that in a global trade war, the US is the buyer and China is the seller, so the US will always have the upper hand.
“If we don’t buy their products, where else can China sell them? They don’t have anywhere else to offload them,” he said.