The Coming Tsunami of Chinese Exports

As the world erects barriers to shield itself from Chinese imports, India will have no choice but to follow suit

- AKASH PRAKASH

It is now common knowledge that China is the world’s manufacturing and trade powerhouse, running a goods trade surplus of $1 trillion—an unprecedented magnitude. The surplus has almost tripled since the pandemic. China runs a trade surplus of over $300 billion with the US, more than $200 billion with the EU, and almost $500 billion with the Global South (the Emerging Market universe). The only countries with which China has a trade deficit are Taiwan and South Korea, due to chip and electronic component imports, and Australia, because of commodity imports.

As the world’s factory, China accounts for 32 percent of global manufacturing value added, followed by the US at 15 percent. The next two countries, Japan and Germany, have shares of only 6.5 percent and 4.5 percent, respectively. Such is China’s dominance that its manufacturing sector is twice the size of its closest competitor. This dominance has emerged in just 30 years. In 1995, China’s share of global manufacturing value added was less than 5 percent, trailing behind the US, Japan, and Germany.

China is unique in its dominance of both high-end and basic manufacturing, holding a market share of 65 percent in EV batteries, electrical equipment, and solar panels, as well as a 50 percent share in apparel and basic materials. China’s manufacturing sector is 10 times the size of India’s.

Exports have been a major driver of China’s growth and prosperity. However, there is a clear disconnect between its share of global manufacturing and consumption. While China accounts for 32 percent of global manufacturing, it represents only 12 percent of global consumption (source: DB, World Bank). Structurally, it produces far more than it consumes and relies heavily on exporting this excess production.