China's decision to attempt to export its way out of its economic doldrums should be of great concern to all U.S. manufacturers. Lingling Wei's recent article in the Wall Street Journal highlights Washington's concerns both in regard to increasing volumes of unfairly priced Chinese imports but also the fact that China has spent a trillion dollars to expand its influence across Asia, Africa and Latin America. The Belt and Road Initiative has created unhealthy dependence for many of these countries on China as they become unable to service their large debt loads.
As China continues to subsidize its industries (including export subsidies), U.S. companies and their workers pay the price. "China Shock 1.0" refers to the flood of Chinese imports into the United States after China joined the World Trade Organization in 2001. The original China Shock has been estimated to have resulted in 2 million lost U.S. jobs.
China Shock 2.0 could be even more devastating to the U.S. manufacturing base. Now, arguably more than ever, American companies are turning to the U.S. antidumping and countervailing duty laws in order to protect their market share, sales, and profit margins.
The fear shared by Washington, Brussels and other capitals is that a wave of Chinese exports, often made with the help of state subsidies, could overwhelm their own industries, leading to job losses and business closures in a repeat of the so-called China shock, when Chinese exports such as steel disrupted global markets at the start of the 21st century.
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