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Shifting Tides: China's Evolving Role in Global Trade and Investment
Columbia University Global Dialogues Club • World Salon
Event Host
Background
China's recent post-COVID manufacturing and export surge, particularly in renewable energy technologies, electric vehicles, and steel, has intensified global competition. It is crucial to understand what is driving this surge and its implications for the world.
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Record Export Levels: By 2021, exports surpassed previous levels, reaching $3,300 billion, and have since remained between $3,000 and $3,500 billion, solidifying China’s position as the world’s leading exporter by value.
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Increased Global Competition: The surge in Chinese exports intensified global market competition, affecting industries in primary destinations like the United States, European Union, ASEAN countries, and India.
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Protectionist Responses: Persistent trade imbalances have led these countries to consider protectionist measures. Examples include India’s nine anti-dumping probes against Chinese products and the U.S. announcing increased tariffs on Chinese imports on May 14, 2024.
Need for Analysis: Understanding the drivers behind China’s post-COVID export surge is crucial for international policymakers, businesses, and stakeholders navigating the evolving global trade landscape.
Our Speakers
Sourabh Gupta
Senior fellow,
Institute for China America Studies
Zhiwei Zhang
President and Chief Economist,
Pinpoint Asset Management
Zhiguo He (何治國）
James Irvin Miller professor of Finance,
Graduate School of Business Stanford University
Hung Tran
Senior Fellow and Economist,
Atlantic Council's Geoeconomics Center
Highlight of the Event
Event Summary / Key Highlights
Stable Export Basket with Emerging Shifts:
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China’s exports remain dominated by electronics like computers and semiconductor parts. New products such as electric batteries are entering the export mix, indicating a shift towards green goods.The rise of green exports could lead to a “second China shock,” especially in lithium-ion batteries and electric vehicles (EVs).
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"We’re beginning to see electric batteries and green goods, particularly lithium-ion batteries and EVs, entering China’s export basket. This is where we’re headed in the future." — Sourabh Gupta
Transformation from Assembly to Intermediate Goods Production:
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China has shifted from low-cost assembly to leading in intermediate goods production. This makes China central to global supply chains, with its intermediate inputs being crucial worldwide. Supply chains have lengthened rather than relocated; Chinese intermediate goods remain essential even if final assembly moves elsewhere.
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"Many firms anticipated moving production out of China, but on the ground, things proved slower and more challenging than expected." — Zhiwei Zhang
Challenges in Supply Chain Relocation:
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Efforts to move supply chains to countries like India, Mexico, and Vietnam have progressed slower than expected. Challenges include inadequate infrastructure, policy constraints, and replicating China’s scale and efficiency. For example, India’s infrastructure and land policies hinder large-scale foreign direct investment (FDI).
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"The trade surplus has to keep widening each year to drive GDP growth, but with the U.S. and EU concerned about their deficits, there’s bound to be pushback." — Hung Tran
Policy Impact on Trade Patterns:
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Increasing protectionist measures by the U.S., India, and Indonesia are influencing trade dynamics. These measures are often sector-specific, targeting industries affected by Chinese competition. Future trade shifts may heavily depend on policy decisions, potentially leading to duplicated and less efficient supply chains.
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"The real estate crackdown is a painful action, but it’s a necessary correction. At some point, it will stabilize, and this transition will push people to realize that the housing market isn’t the only way forward." - Zhiguo He