Last updated on August 29th, 2024 at 10:12 pm
The ‘Made in China’ products have secured a solid position in most global markets, surpassing the growth pace of any nation in recorded history. Huge pressure has been imposed by the current Chinese export boom on other manufacturers worldwide, competing with the tide of cheaper Chinese goods. The new emphasis put on exporting by China would suggest a renewed drive toward solidifying its position as the global leader in manufacturing.
Xi Jinping’s Strategic Shift Towards Manufacturing Exports
According to a report in The Wall Street Journal, Chinese President Xi Jinping has redoubled efforts in the manufacturing sector, aiming to counter recent decelerations in economic growth. With much of the output bound for export, China is once more cranking up its gigantic export machinery, leaving little room for competition in the global market.
Impact on Global Industries and Market Disruption
The effects of the Chinese production juggernaut ripple across industries. CubicPV is a Massachusetts-based upstart in the solar panel business specializing in silicon wafers, one key component. Emboldened by President Biden’s climate legislation, CubicPV announced a $1.4 billion wafer plant in Texas in late 2022. China, in a now-too-familiar pattern, had nearly doubled its silicon wafer production, despite inland demand, overwhelmed the world market, and sent prices 70% downward. As a result, CubicPV was forced to freeze its production plans and lay off some employees-with reluctance-which has caused a disturbance in the market.
Global Trade Tensions Mount as China Exhibits Manufacturing Overcapacity
Thousands of miles away in Chile, iron ore miner and steelmaker CAP feels the pain wrought by China’s relentless adherence to low-end commodity manufacturing. A tide of low-cost Chinese metal into Chile has indefinitely idled CAP’s huge Huachipato steel mill, eliminating about 2,200 jobs. Despite raising tariffs on imported steel products, the Chilean government still can’t help CAP compete with the low-priced Chinese metal.
The Global Consequences of China’s Aggressive Export Strategy
The aggressive export strategy of China with regard to the manufacturing sector is truly pressing and putting stress on businesses worldwide. It heightens apprehension of a possible global trade war. Xi described his policy as “establish the new before breaking the old,” which, in practice, means building up new industries like electric vehicles and semiconductors without hacking away at old ones, such as steel. China’s acknowledgement of the overcapacity problem notwithstanding, heavy manufacturing investments continue unabated, given concerns over industrial security and economic stability. The method has strained global trade relations and added to the economic malaise in the rest of the world.
