…. The Communist country of 1.3 billion people has shifted [$1.9 trillion] into amping up its factories in just four years in an effort to overwhelm manufacturers around the world with an influx of cheap goods.
President Trump’s 125% tariff on all Chinese imports into the US — which he announced Wednesday as he paused steep duties on most other countries — is actually just the latest protective measure against China.
The European Union, Brazil, Mexico and Thailand have either imposed new tariffs in the last few months or are considering such measures to protect their own industries from Chinese imports.
…. Overall Chinese exports rose a whopping 13% in 2023 and 17% in 2024. Exports make up about 20% of the country’s GDP.
Meanwhile, American exports — which were higher than ever 10 years ago — are slumping. Exports only account for 11% of the US GDP — down from 13.6% in 2012.
US exports to China in particular fell almost 3% last year, to a total of $144 billion, according to the US Trade Representative’s Office.
Imports from China, however, hit almost $440 billion — up nearly 3% year-over-year after falling dramatically in 2023.
To compete with China’s manufacturing behemoth, many countries are already building their own great walls. Last year, Brazil raised tariffs on Chinese metal and fiber optic cable exports. The EU raised tariffs on Chinese EVs to 45.3% to protect its own auto industry.
Earlier this year, Mexico proposed matching the US tariffs on China. And Thailand proposed amending its free trade zones to impose a 7% duty on low-value goods from China.
Trump’s unprecedented tariff on Chinese goods could similarly shield the US from the coming wave.
Steep levies on cars, for example, have already stopped cheap Chinese EVs from decimating the American auto industry.
But it’s already too late for some local manufacturers. Chinese imports to Thailand have caused manufacturing in that country to plunge by 50%, ASEAN Briefing reported last year.
Excepts from the NYT article that the Post’s article is based on:
By Keith Bradsher
For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is building two factories in China, each capable of producing twice as many cars as Wolfsburg.
Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation.
China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.
…. Five years ago, before a housing bubble burst, cranes putting up apartment towers dotted practically every city in China. Today, many of those cranes are gone and the ones that are left seldom move. At Beijing’s behest, banks have rapidly shifted their lending from real estate to industry.
China is using more factory robots than the rest of the world combined, and most of them are made in China by Chinese companies, although some components are still imported. After several years of rapid growth, overall installations of new factory equipment have already jumped another 18 percent this year.
When Zeekr, a Chinese electric carmaker, opened a factory four years ago in Ningbo, a two-hour drive south of Shanghai, the facility had 500 robots. Now it has 820, and many more are planned.
As new factories come online, China’s exports are rapidly accelerating. They rose 13.3 percent in 2023 and then another 17.3 percent last year.
Lending by state banks is also financing a boom in corporate research and development. Huawei, a conglomerate making items as varied as smartphones and auto parts, has just opened in Shanghai a research center for 35,000 engineers that has 10 times as much space for offices and labs as Google’s headquarters in Mountain View, Calif.
…. China has been rapidly expanding its share of global manufacturing for decades. The growth came mainly at the expense of the United States and other longtime industrial powers, but also of developing countries. China has increased its share to 32 percent and rising, from 6 percent in 2000.
China’s factory output is bigger than the combined manufacturing of the United States, Germany, Japan, South Korea and Britain.
Even before Mr. Trump won a second term, Biden administration officials warned during their final year in office about industrial overcapacity in China. They raised some tariffs, notably on electric cars.
But during their first three years, Biden administration officials mostly focused on tighter export controls for technologies like high-end semiconductors, citing national security concerns. They left in place tariffs of 7.5 percent to 25 percent that Mr. Trump had imposed on half of China’s exports to the United States in his first term.
It remains uncertain how the president’s much tougher approach this time will play out. Tariffs have occasionally slowed China’s growth in exports, but not stopped it. Other nations are on high alert for the possibility that Chinese exports could be diverted elsewhere, threatening the economies of longstanding U.S. allies like the European Union and South Korea.
China’s automakers were preparing a push into the American car market in 2017, when Mr. Trump first took office. GAC Motor in Guangzhou, China, brought dozens of U.S. car dealers to the city’s auto show that November. The company announced plans to sell gasoline-powered sport utility vehicles and minivans in the United States by the end of 2019.
But GAC and other Chinese automakers canceled their plans after Mr. Trump included cars in his initial 25 percent tariffs several months later.
Chinese companies still sell almost no cars in the United States. That is unlikely to change: With Mr. Trump’s latest moves, Chinese carmakers now face U.S. tariffs as high as 181 percent.
Blocked in the United States, Chinese automakers have continued building factories and have pivoted their export campaigns elsewhere. Their sales have soared in Australia and Southeast Asia, taking market share from Japanese and American brands. In Mexico, Chinese carmakers held just 0.3 percent in 2017; by last year, it was over 20 percent.
Rapid sales gains in the European Union, and evidence of Chinese government subsidies, prompted E.U. officials last October to impose tariffs of up to 45 percent on electric cars from China.
China is not just building car factories. It has built more petrochemical refinery capacity in the past five years, for example, than Europe, Japan and South Korea together have created since World War II. And China is on track to build these refineries even faster this year. Petrochemicals are then turned into plastics, polyester, vinyl and tires.
Robert E. Lighthizer, who was the United States trade representative in Mr. Trump’s first term, said that the latest American tariffs “are long overdue medicine — the real root cause is decades of Chinese industrial policy that has created breathtaking overcapacity and global imbalances.”
China is exporting so much partly because its own people are buying so little. A housing market crash since 2021 has wiped out much of the savings of the middle class and ruined many wealthy families.
China’s huge investments in the chemicals industry extend beyond petrochemicals to include this factory in Zibo, China, which uses a rare earth metal to make chemicals that control pollution in gasoline-powered cars’ exhaust.Credit...Keith Bradsher/The New York Times
Tax revenues are falling, but military spending is rising rapidly. That has left the government wary of spending on economic stimulus to help consumers. China has offset its housing debacle instead with its export campaign, creating millions of jobs to build, outfit and operate factories.
Some Chinese economists have recently joined Western economists in suggesting that the country needs to strengthen its meager social safety net. At the start of this year, the minimum government pension for seniors was just $17 a month. That barely buys groceries, even in rural China.
The country’s best-known economist, Professor Li Daokui of Tsinghua University, publicly called in January for raising the minimum monthly pension several fold, to $110. The Chinese government could afford it, he argued, and extra spending by seniors would stimulate the entire economy.
Chinese officials rejected his advice. When the budget came out on March 5, it had an increase in monthly pensions — but it was just $3, bringing them to $20 a month.
The same budget included $100 billion for investments, including ports and other infrastructure that help exporters. And there was a new program to upgrade technology used in manufacturing across 20 Chinese cities.
