The News
US officials will today raise complaints over Beijing’s alleged economic overcapacity in talks with their Chinese counterparts.
Washington and other Western capitals argue Chinese companies are manufacturing too much, leading to a flood of underpriced goods that undercut their own domestic companies.
Those worries are amplified by China’s slowing economy, which makes it harder for the country to absorb its own production: Each year, it manufactures as much steel as the rest of the world combined, and exports are suddenly surging, up by 35% on the previous year. Beijing dismisses such concerns, arguing that Washington simply wants to constrain its growth.
SIGNALS
Global South braces for redirected cheap Chinese goods
Western resistance to China’s export-heavy economic model has emerging economies like Indonesia, Thailand, and India — which once viewed China as a crucial partner — worried that excess production will harm their markets instead, an Asia expert noted in Foreign Policy. Being flooded with Chinese goods could exacerbate the problems of “premature industrialization” in these countries, making it more difficult for them to reach advanced levels of income, he argued. China’s dominance is bad for competition, and makes other countries vulnerable to changes within its domestic environment, two China experts argued for the Rhodium Group.
Emerging economies have less to offer a more developed China
Emerging economies previously benefited from China’s rapid export growth by supplying it with food and fuel for energy production, but may struggle to ride the wave this time around, the Atlantic Council argued. Beijing’s move up the value chain requires advanced technologies that emerging economies typically don’t produce, and there’s little domestic demand for low-value-added goods from low- and middle-income countries. This can create a vicious cycle: In Pakistan, for example, businesses are turning to cheap rooftop Chinese-made solar panels as electricity prices rise, but mass adoption risks making the power provided by the country’s own grid “unaffordable,” Pakistan’s energy minister told the Financial Times.