China Is Facing Trade Disputes on Every Continent
China has no easy way out of its trade war with the US, which is likely to escalate whether Joe Biden or Donald Trump wins the presidency.
Its next-best option is to limit the conflict to a single front. And that’s getting harder, as skirmishes break out all over.
The latest involves the European Union, which this week imposed new tariffs on Chinese electric vehicles, following in American footsteps.
Biden’s 100% tariff essentially shuts the door to Chinese EVs — you don’t see them on US streets. Not so in Europe.
Industry experts reckon their EVs can be competitive even after the new taxes, and Chinese auto companies are opening plants in places like Hungary and Spain, where they’ll be able to produce and sell tariff-free.
So if US trade actions are met with resignation in Beijing, the EU’s are more likely to spur horse-trading.
It may have already started: Germany, whose auto giants export plenty of cars to China and are vulnerable to retaliation, is working to scrap or water down the tariffs.
That plays into a wider Chinese hope, that Europe can somehow be peeled away from the US, at least on trade and investment.
Beijing has another set of trade troubles brewing with its friends in the so-called Global South. The issue there isn’t the high-tech industries of the future but old-school stuff like steel.
China has too much steel, because local builders don’t need it after the housing market crashed. So the metal gets shipped abroad on the cheap, triggering protests from countries like Brazil, Turkey and Saudi Arabia.
A weak domestic economy is partly to blame: Chinese companies wouldn’t be so focused on selling abroad if people at home were keener to buy.
For President Xi Jinping, that’s a challenge even tougher than haggling over tariffs with Brussels. — Ben Holland