China's flood of cheap goods is angering its allies, too

Torrent of exports to the developing world is causing factories to close and killing jobs

- Jason Douglas, Jon Emont & Samantha Pearson

A deluge of cheap Chinese goods washing over the developing world is jacking up tensions between China and the Global South, complicating Beijing's plans to build alliances as it confronts escalating trade tensions with the U.S. With President-elect Donald Trump saying he plans to significantly increase tariffs on China, Beijing is hoping to unload more of its excess factory production to developing-world countries, from Indonesia to Pakistan to Brazil.

But many of those countries are pushing back, as cut-price Chinese imports put pressure on their factories, killing jobs and blocking efforts to grow manufacturing at home. Many poorer countries have been counting on expanding manufacturing as the best way to propel their rise up the development ladder.

For China, the emerging backlash threatens to undermine its goal of being a leader of the developing world, whose support it has courted as a means of building its own alliances to counter the U.S. Many developing countries now fear they will endure the same kind of "China Shock" that gutted U.S. industry starting a quarter-century ago. Economists estimate the U.S. lost more than two million jobs between 1999 and 2011 as makers of furniture, toys and clothes buckled under competition from Chinese imports.

A similar pattern appears to be playing out in some of China's developing-world trading partners. In Thailand, more than 1,700 factories closed from the start of 2023 through the first quarter of 2024 after Chinese exports to the country surged, according to KKP Research, part of Thai bank Kiatnakin Phatra Financial Group.

New factory openings are helping offset those closures, the bank said, but "the future outlook is likely to become more challenging."