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As US influence wanes, the Chinese trade surplus strangles manufacturing across the globe (www.theguardian.com)
submitted 9 months ago by [B] to c/economy@lemmy.world
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[–] 0 points 9 months ago* (last edited 9 months ago)

This article reads like China is forcing people to buy Chinese goods. They're not. Anyone who does not want to buy Chinese goods because of China's supposedly unfair practices, can choose not to buy Chinese goods. It's that simple.

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    16 comments in c/world@lemmy.world view that post
    [–] 14 points 9 months ago

    The country with the most scientists and engineers in the world, and a decades-long policy of investimg in education and public infrastructure, is outcompeting everyone else at manufacturing? I'm shocked!

    Eswar Prassad, a former head of the China division at the International Monetary Fund

    Maybe your advise to poor countries to cut all public services and sell everything to Western companies was wrong, IMF shill? Maybe countries should instead invest in their people and their infrastructure? Radical, I know. Heresy, even.

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    [–] 7 points 9 months ago

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    [–] 5 points 9 months ago* (10 children)

    China’s overbearing exports are changing minds about the benefits of open trade well beyond the United States.

    If China is so "overbearing," don't trade with them. Don't buy their products. Follow the US's lead and tariff the hell out of Chinese imports. You don't have to import Chinese products. You can choose to not buy Chinese stuff. No one is forcing you to buy Chinese products.

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  • [–] 3 points 9 months ago* (6 children)

    While that is true in theory, it's also true that it's a little more complicated than that.

    My understanding is that in the past, the US tried placing tariffs on steel originating from China

    steel being a strategic good, something where there's a positive externality to having a secure supply

    and it wound up effectively being routed through other countries.

    A second issue is that it's not just a matter of the steel moving through countries directly, but the fact that products can be manufactured in other countries using steel from China, and there isn't any system for tracking that. Like, say I buy a desktop computer case made of sheet metal from, oh, Taiwan. Where did the Taiwanese manufacturer get the steel from?

    searches

    Here's something from Brookings (Brookings not being particularly enthusiastic about either Trump or protectionist trade policy):

    https://www.brookings.edu/articles/is-china-circumventing-us-tariffs-via-mexico-and-canada/

    Since 2018, the U.S. has imposed and ratcheted up tariffs on a broad range of Chinese imports. U.S. tariffs on China have created incentives for Chinese products to circumvent these tariffs by entering the U.S. via Canada and Mexico, paying either the United States-Mexico-Canada Agreement (USMCA) tariff rate of zero or the U.S. WTO Most-Favored-Nation (MFN) rate, which has been well below U.S. tariffs on China. Chinese circumvention of U.S. tariffs undermines the U.S. policy of reducing economic integration with China and addressing the impact of China’s imports on U.S. manufacturing. This paper analyzes the extent of Chinese circumvention of U.S. tariffs up until the end of 2024. Since President Donald Trump came into office in 2025, he has raised tariffs further on imports from China and (but to a lesser extent so far) on imports from Canada, Mexico, and other countries as well. At the time of writing, U.S. tariffs were in flux, but the end result will most likely be U.S. tariffs on imports from China that continue to be higher than U.S. tariffs on imports from Canada and Mexico, thereby maintaining the incentive for circumvention.

    This paper analyzes three ways that Chinese products can circumvent U.S. tariffs:

    1. Transshipment, which occurs when an import from China passes through Mexico or Canada on its way to the U.S.
    2. Incorporation of Chinese products into North American supply chains. This includes manufacturing in Mexico and Canada to produce products that are then exported to the U.S.
    3. Chinese foreign direct investment (FDI) into Mexico and Canada to produce goods that are then exported to the U.S.
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  • [–] 6 points 9 months ago* (last edited 9 months ago)

    By the time the US did any of this, they had already lost most of the manufacturing capacity and supply chains. I don't think this can be brought back through small changes in the capitalist free market model that shipped it overseas. The US shipped manufacturing across border to other countries such as Taiwan and Mexico before China. Through a more holistic lens, I think what we're observing is the Chinese mixed market model outcompeting the capitalist free market model. It's able to spur competition where needed to develop new technology and manufacturing, as well as keep prices down to avoid rent-seeking in established, consolidated industries. We're failing on both accounts and the result is consolidation and unmitigated rent-seeking in virtually every sector which makes competitive manufacturing impossible. This is why my bet is that countries with real independence ambitions that want to preserve democracy would begin adopting the Chinese mixed model to bring costs down and outputs up. We'd see more government-owned corporations that run as non-profits, providing cheap inputs for the rest of the economy, where competition would be created by policy-directed public capital along with ruthless anti-trust enforcement. Democracy would still control the government direction, with much stronger union power. In case this looks strange or unrealistic, this close to how the Canadian among other western economies worked prior to neoliberalisation. This is my positive, democracy-preserving scenario.

    The other likely scenario I see for preserving independence is large private corporations taking over the government further, removing any remaining real democratic power of the citizenry, crushing labour rights and dispensing with any remaining competitive market forces acting on them, driving into some form of corporatocracy/authoritarian capitalism. This is what the US is driving towards.

    There's other scenarios for the non-independent states that depend on what China's long-term strategy is.

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  • [–] 1 point 9 months ago (4 children)

    Ok, well, if tariffs on Chinese imports won't work because China will just find ways to circumvent them, then you just have to accept "artificially" cheap Chinese goods being imported into your country, unless you can convince consumers to stop buying them. That likely won't work either, but I don't see any other option. You can ask China to raise their prices but I imagine that's already been tried and likely also failed.

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  • [–] 3 points 9 months ago (3 children)

    China wasn't circumventing them. Buyers circumvented them. Middle-men emerged in response to the tariffs because there was margin to be made. China just sold to whoever was buying

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  • [–] 2 points 9 months ago* (2 children)

    Then if the US is serious about preventing the supposedly "artificially cheap" Chinese imports from coming in they need to crack down on those importers circumventing the tariffs. If we can't or won't, I don't see another option other than to just accept cheap Chinese imports. And that goes for any economy angry about China's supposed unwillingness to "play fair."

    I assume that what articles like these are advocating for is that importing countries come together and somehow bully China into raising their prices. But whether it's that or tariffs with better enforcement, the result is the same: no more cheap Chinese goods, meaning higher prices for customers who have gotten used to the lower priced imports from China.

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  • [–] 3 points 9 months ago (1 child)

    Correct. The only solution is to invest in domestic production for decades and attempt to catch up to China while China is constantly advancing ahead of us. And to do that would require the government to spend the money because it wouldn't be profitable for years and years and years. And even then it might only be profitable in combination with tariffs. And tariffs raise the price of inputs to the economy, which makes the economy unprofitable.

    It's almost like capitalism is failing.

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  • [–] 6 points 9 months ago

    Is the problem that China is too good at what they do, therefore we need to artificially redirect demand to less-competitive alternatives?

    The capitalist mindset is a sight to behold. Hopefully future generations learn from our mistakes and laugh at us for the dipshits that we are.

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  • [–] 2 points 9 months ago (1 child)

    If the decision was that simple, it would be obvious. But it's not. Lots of countries don't have the capability to manufacture those products they import.

    Why do they not simply build it, you ask? Because that takes a lot of time, money, knowledge, coordination, and motivation. A developing nation with low capabilities and high corruption is never going to be able to compete with China. You can give them a bunch of money, but if it just goes into people's pockets, it doesn't build a factory. If you build a factory, you need people willing and able to operate it, not to mention you need stable utilities and raw material input.

    Why would I invest in building a factory when I can just import the same thing from China right now for mere dollars?

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    • [–] 3 points 9 months ago (2 children)

    From industrial revolution to 1975, US generally runs a trade surplus: https://www.stlouisfed.org/on-the-economy/2019/may/historical-u-s-trade-deficits

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  • [–] [S] 1 point 9 months ago* (1 child)

    Which truly has little to do with the here and now.

    The US trade deficit ballooned to $56.8 billion in November 2025, crushing economists’ forecasts of $43.4 billion and nearly doubling from October’s revised $29.2 billion.

    https://invezz.com/news/2026/01/29/us-trade-deficit-widens-to-56-8-billion-far-exceeding-43-4b-forecast/

    The overall trade balance of the United States in the first half of 2025 was -$606 billion.

    The largest trade deficits held by the United States in 2024 were with China (-$295 billion), Mexico (-$172 billion), Vietnam (-$123 billion), Ireland (-$87 billion), and Germany (-$85 billion).

    https://www.fool.com/research/us-trade-balance/

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