Two decades ago, China shocked the United States with its ability to manufacture and send things quickly and economically on a scale never seen. The consequent increase in exports reconfigured US economy and politics.
Today, a new Chinese shock extends throughout the world, from Indonesia to Germany and Brazil.
As President Donald Trump’s tariffs begin to exclude China from the United States, their largest market, Chinese factories are sending their toys, cars and shoes to other countries at a pace that is transforming economies and geopolitics.
So far this year, China’s commercial surplus with the world is almost US $ 500 billion, an increase of more than 40% compared to the same period of the previous year.
While the two world superpowers dispute trade, the rest of the world is now preparing for even greater Chinese shaking.
“China has many things that you need to export, and although the United States imposes tariffs or not, it is practically impossible to stop changes in flows,” said Leah Fahy, a specialized economist in China of Economics Capital.
China’s avalanche of exports is a consequence of government policy and the deceleration of the national economy. To cushion the impact of a real estate crisis that reduced the richness of millions of homes, Beijing has been injecting money in its manufacturing sectors for several years, which produce many more products that the country demands.
China’s world market share in all categories of goods has increased considerably, according to a FAHY analysis. This will continue despite tariffs because Beijing is unlikely to change the course of its export -oriented policies.
When diverting the flow of its products to Southeast Asia, Latin America and Europe, China has already relieved the economic effect of a collapse of the United States demand. But this puts China in potential conflict with commercial partners who also face Washington’s pressure.
Trump threatens to impose strong tariffs on the same countries that are being flooded by more Chinese products, such as Vietnam, Cambodia and Indonesia. At the moment, those tariffs have been paused to negotiate. Some countries have benefited from an increase in the investments of foreign companies trying to transfer production from China as soon as possible.
Others have also been able to forward some Chinese products by exporting them to the United States. But if they cannot negotiate much lower tariffs, national companies in countries that face serious US tariffs in Southeast Asia and other places could be crushed by the competition of Chinese companies.
Although Trump has disturbed trade with unprecedented tariff levels in a century, the drastic change in Chinese exports had been brewing long before he assumed the position in January.
The real estate crisis of China-excess housing, prices in minced and generalized bankruptcies-began to have an impact on the economy in 2021. Chinese legislators did not take long to divert the cheap loans of the promoters to exporters and manufacturers, a measure that finally counteracted the collapse of construction, which in its peak contributed to a third of economic growth.
For Beijing, it was a measure of proven efficacy: throw money to solve the problem.
“They often invest too much to reach the scale first, and then the process is facilitated by government policies,” said Tommy Wu, a commerzbank economist. “That contributes to this problem today.”
China had already embarked on an internal industrial policy in 2015, known as made in China 2025, to manufacture goods of greater value and that require greater qualified labor, such as sophisticated computer chips and electric vehicles. That initiative led to the United States and Europe to raise tariffs on electric cars, solar panels and other high -tech products.
But China’s desire to boost manufacturing since the collapse of the real estate market has gone much further. Even while they made more advanced products, Chinese manufacturers redoubled the manufacture of Baratijas, the type of cheaper items that China manufactured with a master’s degree two decades ago. China rewrote the manual, which baffled economists.
“China does not develop as economic theory suggests, and now we face a new model,” said Priyanka Kishore, a Singapore economist, referring to the traditional trajectory of economies that move away from low -end manufacturing as they become more mature and developed.
“This is a challenge because it exacerbates pressures on the rest of the world,” Kishore said.
As tariffs begin to realign commercial flows and supply chains, the economic effect begins to be noticed.
In Germany, where sending Chinese products increased last month for the previous month over the previous year, companies have expressed concern to WU, Commerzbank’s economist. Automobile manufacturers are the ones that most notice it.
China has made 45 percent more electric vehicles this year, although Chinese companies are immersed in a fierce price war in their own country due to the lack of appetite of consumers. Exports of electric vehicles have fired 64.6 percent this year, according to the Chinese car manufacturers association.
Countries that have supported the weight of the increase in Chinese imports have also suffered strong falls in their own manufacturing, which has caused losses of jobs and bankruptcies.
In Indonesia, clothing factories are closing, claiming that their inability to compete with the cheapest clothes from China. About 250 thousand people lost their jobs in the clothing industry in 2023 and 2024, said Redma Gita Wirawasta, president of the Indonesian Association of Hilados and Fiber Producers. Thai manufacturers of car parts have closed due to Chinese electric vehicles. Brazilian car manufacturers have asked the government to initiate anti -dumping investigation into Chinese cars sold in the country.
For most countries, there are two options. The first is not doing anything and seeing how the manufacturing industry is emptied, said Sonal Varma, chief economist for Asia, with the exception of Japan, from the Japanese Bank Nomura.
The other option is to raise tariffs and use other protectionist measures in specific sectors, as the United States has done with China. This could cause the anger of China, which uses trade and investment as a lever in its diplomatic contacts, or the United States.
“The supply chains are forking along geopolitical lines,” Varma said. “It has become much more difficult for countries to decide: Who do you align with?”