Lim Teck Ghee
“Western hostility towards China reflects the grudging realization that the West may not be the pinnacle of achievement after all. Rather than possibly learning from China’s successes, westerners have chosen resentment borne of a sense of frustrated superiority”. — “Why the West’s resentment of China is so misguided”As China’s higher value industrial and manufacturing exports carve an increasingly larger share of markets around the world, the United States (US) and European Union (EU) countries have undertaken separate but in reality complementary policies aimed at beating back this unprecedented threat to Western dominance of the international trading and economic order.
The criticisms levelled by Washington and Brussels to counter the Chinese exports impacting their domestic producers for now emphasize that China’s state-led and subsidized export-driven economic model has created excess manufacturing capacity, flooding their markets with cheap goods.Apart from the over-capacity charge refrain, also commonly featured in the media pronouncements are accusations of unfair trade practices, intellectual piracy, market disruption and national security concerns as the flood of Chinese products – electric vehicles, batteries, solar panels, wind turbines, ships, electronic devices and components, steel and aluminium products, and practically the entire range of everyday consumer and household products – gain a foothold in Western markets.
This popularity – on account of their quality, pricing and superiority over domestic and other rivals – has driven the US and EU nations into record deficits in their accounting trade figures with China. An indication of how serious these concerns have become for Western governments and policymakers is that the issue of alleged Chinese over capacity is a key subject of negotiation in the ongoing US and China tariff meetings. It also emerged as the most prominent concern of the EU delegation visiting Beijing for a one day summit to mark the 50th anniversary of China-EU diplomatic relations.
What policy changes can arise from these negotiations and meetings remains to be seen.
Over Capacity: Bane for Some, Boon for Others The consensus amongst independent market analysts and international organizations such as the International Monetary Fund (IMF) is that the charges levelled against China’s export success have little or no basis. This success has been hard earned and is due mainly to China’s huge disciplined work force and adherence rather than subversion or evasion of the market principles, norms and practices required of World Trade Organization (WTO) member countries.
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