China is unleashing a new export shock on the world

As President Trump's tariffs close off the US market, Chinese goods are flooding countries from Southeast Asia to Europe to Latin America, writes Alexandra Stevenson from Shanghai

- Alexandra Stevenson

Two decades ago, China shocked the United States with its ability to make and ship things fast and inexpensively on a scale never before seen. The resulting surge of exports reshaped America's economy and its politics.

Today, a new China shock is cascading across the globe from Indonesia to Germany to Brazil.

As President Donald Trump's tariffs start to shut China out of the United States, its biggest market, Chinese factories are sending their toys, cars and shoes to other countries at a pace that is reshaping economies and geopolitics.

This year so far, China's trade surplus with the world is nearly $500 billion — a more than 40% increase from the same period last year.

As the world's two superpowers duke it out over trade, the rest of the world is now bracing for an even bigger China shock.

"China has loads of things that it needs to export, and whether or not the US puts tariffs on China, it's pretty much impossible to stop the shifts in flows," said Leah Fahy, a China economist at Capital Economics.

The flood of exports from China is the consequence of government policy and a slowing domestic economy. To soften the blow of a real estate crisis that reduced the wealth of millions of households, Beijing has for several years been shovelling money into its manufacturing sectors, which are making far more things than there is demand for at home.

China's global market share for all categories of goods has risen sharply, according to an analysis by Ms Fahy. This will continue despite the tariffs because Beijing is unlikely to change the course of its export-oriented policies.

By diverting the flow of its stuff to Southeast Asia, Latin America and Europe, China has already eased the economic effect of a plunge in demand from the United States. But it puts China in potential conflict with trading partners that are also facing pressure from Washington.