Sparks flying amid China’s high-tech export boom
Shipments of electric vehicles, ships, and steel carry a heavy discount to ‘undercut overseas competitors’
China’s advanced manufacturing export boom illustrates the precarious state of the world’s second-largest economy. Mired in dwindling domestic demand, Beijing has flooded overseas markets with heavily subsidized big-ticket items.
Data released by the General Administration of Customs showed that mainly electric vehicles worth a staggering US$11.5 billion were shipped overseas last month. The EV flood has raked in almost $88 billion in export revenue so far this year.
“While the external environment has become more complex, external demand for Chinese products remains solid,” Li Yong, at the state-run China Association of International Trade, told the Communist Party-controlled Global Times.
“In other words, Chinese products remain so competitive for consumers in many countries and regions that attempts to decouple cannot succeed,” Li said, referring to China’s tariff wars with the United States, the European Union, and Canada.
Numbers game:
- More than 460 ships worth a record of nearly $5 billion were exported to overseas clients in September.
- That was more than double the amount sold during the same period in 2023.
- Cheap steel exports also surged this year by 21% to nearly 81 million tons.
China’s economy is rotting from the head.
Daron Acemoglu of the Massachusetts Institute of Technology
Delve deeper: Caught in a vicious circle of “deflation, companies have been cutting prices to boost exports, further undercutting overseas competitors,” Bloomberg News reported.
Between the lines: “Overall export volumes have risen almost every month this year, while prices have been negative since May of [2023],” it said.
Big picture: Last week, Beijing rolled out a stimulus package to resuscitate an economy still hooked on life support after the property meltdown in 2021. Ballooning local debt, stagnating wages, and rising unemployment only add to the toxic mix.
What was said: “China’s economy is rotting from the head,” Nobel Prize laureate Daron Acemoglu, of the Massachusetts Institute of Technology, wrote in a commentary for Project Syndicate back in 2022.
Prophets, not profits: In conclusion, Acemoglu warned that the “tightening grip over the economy” by President Xi Jinping “means that these problems will intensify.” And no one “will speak up about the train wreck he has set in motion.”
China Factor comment: The “problems” have intensified while a compliant academia parrot “Xi’s Thought” as the “train wreck” unfolds. Off the rails would be rather apt.