China floods the world with a record amount of cheap goods after imposing American customs taxes

President Xi Jinping's export engine has been shown to be unstoppable during the five months of US customs duties, pushing China to a $ 1.2 trillion record surplus, Bloomberg Agency reports on Tuesday.

With the restriction of access to the US market, Chinese producers have shown that they do not give back: India's acquisitions have reached a historical level in August, deliveries to Africa are heading for an annual record, and sales to Southeast Asia have exceeded the peak of the Pandemic period.

This generalized explosion arouses concern abroad, while governments weigh potential damage to their internal industries in relation to the risk of antagonizing Beijing – the main commercial partner for more than half of the planet.

For the time being, only Mexico has responded publicly this year – proposing customs duties of up to 50% for Chinese products, including cars, car parts and steel – but other countries are under increasing pressure.

A “shy reaction” of flooded countries with Chinese goods

In the last few weeks, the Indian authorities have received 50 requests for investigations regarding the goods dumping in countries such as China and Vietnam, according to a familiar person with the situation, who has requested anonymity because the information is not public.

The Minister of Commerce in Indonesia has promised to monitor a “flood” of goods, after viral videos with Chinese traders who praised that they would export jeans and shirts of up to 80 American cents to the big cities have aroused indignation.

Despite the pain felt, the chances of more significant actions remain limited. Countries already trapped in commercial negotiations with the Trump administration seem reluctant to engage in a separate trade war with the second largest economy in the world. This offers Beijing a break over American customs duties, which economists had previously predicted that the annual China's GDP growth rate could halve.

“The timid reaction is probably influenced by the commercial negotiations with the US,” Christopher Beddor, deputy research director for China at Gavekal Dragonomics, told Bloomberg Bloomberg. “Some countries do not want to be charged as favoring the disintegration of the global commercial system. Others may postpone customs taxes against China to provide them as US concessions in their own commercial negotiations.”

China's diplomatic strategy: charm and threats

Officials trying to protect their Beijing savings walk with caution. The Minister of Commerce in South Africa has recommended not to resort to punitive customs duties for imports of Chinese cars-which have almost doubled this year-and is looking for more investments. Chile and Ecuador discreetly impose targeted taxes on cheap imports, after the Chinese e -commerce giant TEMU has registered a 143% increase in monthly active users in Latin America since the beginning of the year.

While Brazil threatened with more aggressive reprisals, this summer offered to the largest Chinese manufacturer of electric cars, byD, facilities to intensify their local production.

Beijing uses both “diplomatic charm” and economic threats to prevent countries from adopting direct reprisals. Earlier this month, the President of China mobilized BRICS nations to form a united voice against protectionism during a video conference of the block leaders, while officials of the Chinese Ministry of Commerce warned Mexico to “think twice” before acting, pointing out that such measures will attract reprisals. In addition, the Trump administration presses EU nations to impose up to 100% customs duties to China due to Russia's support.

Chinese officials say that their trade with the rest of the world are within reasonable limits and that Beijing does not seek to dominate global markets. “When there is a request from abroad, China exports accordingly,” said Liao Min Deputy Minister in July. Last month, the official newspaper People's Daily rejected the Western criticisms on “dumping”, arguing that Chinese exporters do not sell.

Economic data shows something else

Although Chinese exporters sell in record quantities, the trade explosion does not make them richer and does not help with the country's internal problems. The profits of the industrial companies decreased by 1.7% in the first seven months as the producers, trying to reduce the internal overcapacity under the XI initiative of “anti-involution”, cut the prices to sell more abroad.

It only aggravates China's persistent deflation, about to become the longest of the period after the country's opening in the late 1970s.

Although increasing deliveries to certain countries suggests that some goods intended for American market and other destinations are redirected to bypass Trump's customs wall, this is just a part of the image. The demand for China's peak innovations in the technological field has fueled much of the recent intensification of trade.

China has redirected some part of exports to Europe

Increasing sales to rich markets in Europe and Australia also indicates that Beijing has simply found new buyers for many products.

India shows how to redesign the global commercial map by Trump brings new Beijing benefits. Exports to the neighbor of China reached a record of $ 12.5 billion last month, largely caused by Apple suppliers, who quickly moved the production of iPhone to India in the neighboring country.

However, these companies still depend on components and tools largely manufactured in China.

In July, Chinese companies have sent nearly $ 1 billion into computer chips to India and billions of dollars in phones and pieces, according to Beijing data. This places exports on the trajectory to exceed last year's record, the value of deliveries so far being almost equal to the total on 2021.

“China performed better than expected in the first half of the year,” Sajjid Chinoy, chief economist for India at JPMorgan Chase, told Bloomberg Sajjid Chinoy.

“Some of this success is due to the fact that China has found other export markets, including Europe, which has been a key safety net for exports to the US,” he believes.