One trillion reasons to get tough on China’s dumping

China’s trade surplus surged to nearly US$1 trillion last year as cheap exports flooded foreign markets. The eye-watering numbers came ahead of Donald Trump’s return to the White House next week for a second term in the Oval Office.

He has already accused Beijing of using dumping tactics to prop up an economy on life support as domestic demand continues to weaken and imports crash. 

Equally concerning is the way President Xi Jinping has “funneled cash” into manufacturing. This has turbo-charged capacity, fueling an export blitz in everything from steel and chemicals to electric cars and smartphones as prices tumble.

“China is making a major mistake in producing two to three times domestic demand in areas, [such as] steel or robotics or electric vehicles, and then exporting the excess around the world,” Nicholas Burns, the outgoing US ambassador to China, said.

Data points:

• Chinese exports to the rest of the world jumped nearly 6% last year to $3.6 trillion compared to 2023.
• China’s exports exceeded imports by a record-breaking $992 billion, the General Administration of Customs reported. 

Everyone has a plan until they get punched in the face.

Mike Tyson, former world heavyweight champion

Delve deeper: “Since 2021, China has pivoted back toward exports in a big way – and its export growth is increasingly coming at the expense of other manufacturing-heavy economies around the world,” Brad Setser at the Council on Foreign Relations said.

Between the lines: In short, this policy is unsustainable and has triggered a backlash from the United States, Europe and other major democracies across the globe.

Big picture: “The surplus with the US rose 4.4% last year. It increased 9.6% with the European Union and jumped almost 36% with the 10 member states of the Association of Southeast Asian Nations, the latest data shows,” Bloomberg News reported.

Why it matters: “The world just cannot absorb all the stuff that China produces,” Stefan Angrick, a senior economist at Moody’s Analytics, said, The Wall Street Journal reported.

The bottom line: What Trump does when it comes to promised nerve-pinching tariffs against Beijing will set the tone of his second presidency. China has insisted it has a “plan” to deal with him and his sanctions.

China Factor comment: But as Malcolm Riddell, the founder of CHINA Debate, pointed out by quoting former world heavyweight champion Mike Tyson, “Everyone has a plan until they get punched in the face.” Seconds out, round two.