US tariff pressure leaves 'Only China Booming'… World economy 'worried'

China launches a deluge of low-priced goods

China's export performance, amid ongoing trade tensions with the United States, is soaring. While the US is reshaping the global trade order with America-first policies and high tariff pressure, only China appears to be recording export growth on its own. This is due to a rapid shift in focus to Asia and Africa after US market access was blocked.

Record-high trade surplus expected this year

According to Bloomberg and Reuters on the 6th, India's imports from China in August this year reached $12.5 billion, a record high. China's exports to Africa are also hitting record highs year after year.

In South Africa, the number of Chinese-made cars has nearly doubled just this year. Sales of Chinese products in Southeast Asian markets have also surpassed the peak during the COVID-19 pandemic. In Chile and Ecuador, the monthly users of Chinese e-commerce firm Temu have surged 143% so far this year.

Some even predict that China will record this year's largest-ever trade surplus of $1.2 trillion.

Several factors have combined recently to boost China's export performance. A major factor is the Chinese government's active search for alternative export channels in response to US pressure on China.

Domestic issues in China are also intertwined. The Chinese government is fighting against overproduction and cutthroat competition across the board — from traditional industries such as steel to new industries like electric vehicles and solar power, and even food sectors like delivery. Because consumption is depressed in major industries and items do not sell even if prices are lowered, toxic inventories are accumulating and destructive competition among firms is intensifying.

The Chinese government has even revised price laws for the first time in 27 years to secure pledges from companies engaging in low-price competition to prevent recurrence. It is strictly controlling even new production capacity.

As a result, Chinese companies are turning their attention more to overseas markets than to the domestic market.

Chinese President Xi Jinping's diplomacy toward the US is also having an impact. China's export drive can work to strengthen China's bargaining power in trade negotiations with the United States. It can indirectly signal that China remains solid even without American consumers.

Countries have mixed feelings as low-priced goods flood markets

Countries' sentiments toward the increase in Chinese-made products are complex. The flood of low-priced Chinese goods is increasing negative impacts on domestic industries.

However, analysts say that starting another trade conflict with the world's second-largest economy, China, is not an easy choice when tariff negotiations with the Donald Trump administration have not even been properly concluded, so many are accepting it reluctantly. Only Mexico appears to be moving to strike back against Chinese products.

Thanks to this, China seems to have avoided, for now, the adverse shock of a sharp fall in economic growth. Many economists have been warning since early this year that China's growth rate would sharply decline due to the tariff war with the United States.

Many experts believe it is not easy to stop the onslaught of low-priced Chinese goods. Chinese electric vehicles, which have continued to grow despite punitive tariffs from the US and Canada and crackdown measures by the Chinese government, are a prime example. In the first seven months of this year, Chinese EV makers such as BYD, NIO, and Xpeng exported a similar number of electric cars as in the same period last year.

However, this can have the side effect of transferring China's overproduction problems to other countries. Even now, various products that cannot be absorbed domestically in China are being released onto foreign markets. It means that other countries may gradually fall into a 'low-price addiction' to Chinese goods.

A Chinese economic expert said, "We need to consider whether this phenomenon actually helps the Chinese economy," adding, "In a situation where consumption does not recover, it is highly likely that growth without profits will occur."

Beijing=Correspondent Kim Eun-jung kej@hankyung.com