China’s sluggish domestic demand and excessive production capacity have led to a surge in exports of many products. Foreign media analysts believe that this could result in Chinese cheap goods being boycotted in emerging markets, sparking more trade disputes between China and other countries.
This week, the European Union is set to announce an increase in tariffs on Chinese electric cars. Earlier, the United States took similar actions, and Canada may follow suit, indicating the concerns of Western countries regarding China’s overcapacity and unfair trade practices.
However, China’s export boom is not limited to high-tech industries that Western countries are concerned about. Currently, China’s trade surplus in the manufacturing sector has reached near record levels, including products such as steel, animal feed, etc. Due to the economic downturn affecting domestic sales in China, these products are increasingly being exported cheaply overseas.
Bloomberg points out that if this situation continues, it may trigger reactions from more countries outside of Europe and America.
Former Malaysian Deputy Minister of International Trade and Industry, Ong Kian Ming, told Bloomberg that China’s trading partners are concerned that the excess capacity in the housing sector will lead to some materials being dumped in overseas markets.
Last year saw a record high in the number of anti-subsidy and anti-dumping measures taken against Chinese goods, indicating the beginnings of a backlash. According to the World Trade Organization data, countries like India and Korea have implemented anti-dumping measures targeting Chinese products such as steel, wheel loaders, and wind towers.
After analyzing official data, Bloomberg pointed out that due to the collapse of the Chinese property market leading to a decline in domestic demand, China’s steel exports reached a record 13 million tons in March and maintained this level in April. Meanwhile, Chinese enterprises are expected to produce 1 billion tons of steel this year, as there are no signs of a rebound in the housing market, they are likely to export more surplus metal.
Over the past three years, international steel prices have continued to plummet, leading to some Latin American countries imposing tariffs to prevent further price declines and protect local producers. Combined with the new tariffs that came into effect in the US in August, more metals may flow towards Asia.
Companies in Vietnam and India have started to complain about the influx of cheap metals affecting their profits. Thailand and Saudi Arabia are also considering imposing new tariffs.
In the first four months of 2024, China’s soybean meal exports surged to nearly 600,000 tons, almost five times the same period last year. Soybean meal is mainly used for animal feed, with China’s reduced demand for pork and a decline in the number of live pigs, Chinese companies have begun processing and exporting surplus soybean meal.
Another area experiencing a significant increase in exports is petrochemicals. According to the research institution Mysteel OilChem, China will have more propane dehydrogenation (PDH) capacity put into operation this year, increasing total production capacity by 40 percent. This could have a disruptive impact on the chemical industry in South Korea and Japan.