China’s export boom goes far beyond the high-tech industries that are in Western crosshairs, leaving Beijing at risk of a backlash from countries that have so far preferred to sit on the trade-war sidelines.
China’s trade partners worry that overcapacity in areas tied to housing “will lead to the dumping of some of these materials in overseas markets,” said Ong Kian Ming, Malaysia’s former deputy minister for international trade. Prices have been plunging for almost three years, leading some Latin American nations to impose tariffs to stem the tide and protect local producers. Those barriers, along with increased US tariffs due to go into effect in August, may lead to even more metal being directed to Asia.
Another area where China has seen a manufacturing surge is petrochemicals. A wave of new plants is producing the building blocks of plastic products from water bottles to football helmets – and the boom isn’t over yet. China is expected this year to bring online enough propane dehydrogenation plants to boost its overall capacity by 40%, according to researcher Mysteel OilChem.
One policymaker in Beijing is pushing for further moves in that direction. People’s Bank of China adviser Huang Yiping recently called for China to implement a version of the Marshall Plan, a US foreign-aid initiative after World War II. He said China could lend money and provide technology to developing nations so they can build their own renewable energy industries.