China’s ‘Made in China’ products have already established a stronghold in the international market, far surpassing that of any other country in history. Manufacturers around the world are under tremendous pressure due to the flood of cheap Chinese goods. China is now focusing more on exports in an attempt to become the world’s leading manufacturer.
According to a report The Wall Street Journal, Chinese President Xi Jinping has increased his focus on the manufacturing sector, where a large share of production is going to exports, a move his government has taken in response to the slowing economic growth he has faced in recent times. China is once again expanding its vast export apparatus, giving rivals little chance of staying in the market.
The impact of China’s manufacturing dominance is evident in a variety of sectors. For example, Massachusetts startup CubicPV bet on silicon wafers, a high-tech component in solar panels. Encouraged by climate legislation enacted by President Biden two years ago, along with billions of dollars in tax credits and government loans, CubicPV announced plans for a $1.4 billion wafer plant in Texas in late 2022.
Since then, China has nearly doubled its production of silicon wafers—far more than it needs. The extra wafers had to go somewhere, and they went overseas, driving down prices by as much as 70%. CubicPV had to halt its production plans earlier this year, putting engineers and other employees out of work, citing “a distorted market as a result of China’s overcapacity.”
In another case, thousands of miles away in Chile, iron ore miner and steelmaker CAP is grappling with China’s continued commitment to low-price commodity manufacturing as an onslaught of cheap Chinese metal hits its shores. The firm said this month it would shut its huge Huachipato steel mill in central Chile indefinitely, losing about 2,200 jobs. The company said it can no longer compete with low-price Chinese metal after the government raised tariffs on steel bars and other imported products.
Beijing’s strategy to strengthen its manufacturing sector through aggressive exports is creating major challenges for businesses around the world. This growing trade tension raises concerns about the possibility of a new global trade war.
WSJ report He further said that other countries have launched anti-dumping investigations to see if Chinese goods are being sold at less than fair prices. India is investigating Chinese pigments and chemicals. Japan is investigating electrodes. Britain is investigating imports of excavation machines and biodiesel, while Argentina and Vietnam are investigating Chinese microwave ovens and wind towers.
Xi Jinping’s strategy of “building the new before tearing down the old” prioritises building new industries such as EVs and semiconductors while maintaining traditional industries such as steel. Despite acknowledging overcapacity, China continues to invest heavily in manufacturing, driven by concerns about industrial safety and economic stability. This approach is affecting global trade relations and causing economic hardship in other countries.
