China’s communist regime seems to be making enemies everywhere. Beijing’s aggressive trade policies have already undermined its so-called goodwill in the United States, Europe, and Japan, where all have raised trade barriers against Chinese goods, and the incoming Trump administration will likely impose more barriers.
Now, China is seeing similar complaints and pushback from developing economies in Asia and Latin America, the so-called Global South. On top of President-elect Donald Trump’s plans for new tariffs, this latest development puts China in a challenging economic spot and suggests even greater difficulties as Beijing tries to get the nation’s economy back on track.
The developing difficulties with the Global South stem from a series of policy errors in Beijing, both domestic and international. These began with the COVID-19 pandemic and the property crisis that followed quickly on its heels. The pandemic set the economy back, but the greatest damage was done by the zero-COVID policy, which maintained lockdowns and quarantines in China long after the rest of the world reopened.
This long period of restraint did much to undermine the security of Chinese workers and private businesses in terms of their ability to earn consistently, a sense that has induced a general reluctance to spend. On top of this mistake was Beijing’s reluctance to react to the failure of several property developers starting in 2021. Official inaction allowed these failures to adversely impact Chinese finance and economics generally. Chinese authorities turned a problem into a severe crisis, stalling construction and depressing real estate values and, hence, household wealth, which has further constrained consumer spending and investment spending by private businesses.
Unable to get the economy moving again by restarting the Chinese consumer and private business investment, Beijing made another policy mistake. It decided to invest heavily in select state-owned manufacturing operations. In the face of slack consumer, construction, and business investment spending at home, however, this added production capacity forced China to seek exports. This failed due to another policy error.
Because Beijing in the past had refused to negotiate honestly with the large, developed economies of the world when they complained of China’s trade practices, the United States, Europe, and Japan have taken steps to limit China trade. This circumstance has forced Beijing to look to the Global South to take its surplus production. But now, these nations are beginning to push back just as the United States, Europe, and Japan have. Indeed, the complaints from these developing economies sound remarkably like those made by businesspeople, trade unions, and politicians throughout the developed world.
Complaints about Chinese products have become common throughout the developing world. Data from the International Monetary Fund offer insight, showing a 19 percent surge in Chinese sales to these economies since the start of 2022 compared to a growth of only 11 percent in sales from these economies to China. China’s trade surplus with the developing world has increased by 56 percent since 2021.
In Indonesia, the communications ministry has pointed out how the nation’s small business community has suffered terribly due to a flood of Chinese imports. A prominent Indonesian toy manufacturer in the city of Surabaya recently announced that it must cut back because of a doubling in Chinese competition since 2018. Indonesia has blocked the Chinese firm Temu, which sells Chinese goods directly from the factory to the consumer’s door. Further, Indonesia is finalizing 200 percent tariffs on Chinese textiles and ceramics.
Indian Chemicals, noting that its earnings are down some 30 percent from a year ago, complains that Chinese products have hurt the company at home and driven it out of global markets.
Even Brazil, which still has a relatively even trade balance with China, complains that Chinese steel, made with Brazilian iron ore, returns to constrain sales of Brazilian steel. Despite the warmth between Brazilian President Luiz Inacio Lula da Silva and Chinese leader Xi Jinping, Brazil has raised tariffs on Chinese steel, wire, auto parts, and telecommunications equipment.
These nations had made a series of pleas to Beijing for relief. Bangladesh and South Africa have been especially prominent. These and other emerging economies have taken steps to limit the flow of Chinese products. To date, they have put in place a total of 250 tariffs and trade-defense measures against China. Some 120 of these have been put in place by nations that have joined China in the so-called BRICS group (the initials of its founding nations, Brazil, Russia, India, China, and South Africa).
From a diplomatic standpoint, these matters are especially awkward. Beijing has billed China as a leader of the Global South and its champion against so-called abuse from European and American businesses. Now, it looks as if Beijing is abusing these economies. With increasing hostility toward China trade from both Europe and the United States, coupled with a seemingly stagnant domestic situation, Beijing has no other place to turn. It does not bode well for a quick improvement in China’s economic prospects.
