View / China’s ‘Everything, Everywhere, All At Once’ ambition

One of the consequences of US tariffs is that China’s manufacturing machine has shifted its exports around the world, and no one is complaining more than Europe. Authorities there have launched dozens of anti-dumping and anti-subsidy probes as a torrent of cheap Chinese products swamps EU markets, including EVs, medical devices, and tires. European Commission President Ursula von der Leyen warns that trade relations with China have reached a “clear inflection point.”

Yet by far the more consequential “China Shock” is reverberating around emerging economies, especially China’s neighbors. These countries are struggling to cope with an export juggernaut — one that is hyper-competitive both at the frontiers of technology, and at the trailing edge.

China is a superpower with sweatshops: In southern Guangdong province, the world’s factory floor, robot arms help assemble batteries for BYD, drones for DJI, and 5G network gear for Huawei, while in cramped workshops nearby, young women from the countryside cut and stitch rock-bottom priced clothing — $12 jackets, $6 skirts, and T-shirts for as little as $2.

This devastatingly effective combination has enabled China to export its way out of a prolonged post-COVID economic slump that exacerbated already massive industrial overcapacity. Now, as US President Donald Trump’s tariffs kick in, its export machine has kicked into higher gear: China’s trade surplus this year is on track to soar to a record $1.2 trillion.

China is now competing head-on not just against other advanced economies but the most vulnerable ones. In effect, it is blocking the ladder to prosperity for countries in the Global South.

Indonesia lost 250,000 jobs in its backbone textile industry between 2022 and 2024 because of a deluge of Chinese imports, according to the Indonesia Fiber and Filament Yarn Producer Association — and another half-million may now be at risk. Some of the low-end merchandise arrives in small packages from online retailers; other goods are smuggled in to avoid import duties. This year, one of Indonesia’s largest garment enterprises went bankrupt, closing its doors on more than 10,000 workers.

Even weavers of traditional Indonesian batik — a fabric made through a dyeing technique using wax — have given up trying to compete with cheap Chinese knock-offs.

In Thailand, the Chinese export tsunami has precipitated a crisis among smaller firms making car parts, electrical equipment, and consumer goods, stoking fears of deindustrialization. Village-based cottage industries are particularly at risk; for example, makers of hand-painted ceramic “rooster” bowls have been idled en masse by Chinese fakes that sell for one fifth of the price.

China’s exports to Southeast Asia are now larger than those to the US. Malaysia’s semiconductor industry, a key growth-engine, is feeling the pressure. Electronics manufacturers in the Philippines are struggling. Vietnam has erected tariff barriers to Chinese hot-rolled coil steel products.

Beijing styles itself as a partner for the developing world, a force for economic and social progress from Asia to Latin America and Africa, in contrast to an America that has turned protectionist.

But its economic model breaks with a centuries-old pattern in which wealthy countries cede their low-skill industries to economies making their way up in the world. Textiles and apparel fueled the industrial rise of Britain, then the US, and eventually — in the 1960s — the “Tiger” economies of Asia; clattering looms and whirring sewing machines helped make Hong Kong, South Korea, and Taiwan wealthy. In turn, these Asian economies bequeathed textiles and other light industries to China.

But China is not letting go. Alone among industrialized economies, it has held on to all the basic industries that helped it clamber out of poverty, and at both ends of the industrial spectrum it leverages its unmatched scale, unsurpassed infrastructure, and huge state subsidies to drive down prices and crush competitors.

Gordon Hanson, a Harvard professor who co-authored the “China Shock” study that showed how Chinese exports wiped out US factory jobs earlier this century, today warns of “China Shock 2.0 or China Shock 3.0″ as China takes on the emerging world.

“There’s a political response to all this,” Hanson told Bloomberg. “People get mad.”

In fact, there’s been very little blowback from politicians in the Global South, so far. These economies are stuck: They can’t complain too loudly about dumping by China, which lends heavily to their economies, provides desperately needed infrastructure, and supplies them with industrial parts.

Yet China keeps piling on the trade pressure. Africa is the new hotspot for Chinese exports: In September, Chinese shipments to the continent surged 56% year-on-year. In the same month, shipments to Latin America were up 15.2%. Some of China’s exports to emerging economies, particularly in Asia, are being rerouted to the US to get around US tariffs, but they also compete with local manufacturers in those firms’ home markets, while displacing their overseas sales.

Meanwhile, China has made clear it intends to keep competing against the entire world, on everything: The Communist Party’s just-released five-year economic plan prioritizes textiles and brain-computer interfaces, light industry and nuclear fusion, mining and quantum technology. The country’s leader, Xi Jinping, wants it all, although as the economy sinks he is placing more emphasis on old-line industries that still provide the bulk of jobs. “The real economy should not be neglected,” Xi says.

Xinhua, the party’s propaganda arm, boasts that traditional industries, boosted by billions of dollars of investments in technical upgrading, will “bloom anew.”

For now, rich countries are worried about their economic prospects while poorer ones are grappling with an even more existential question: Will China ever make room for them to rise?