It’s not us, it’s you: China’s surging overcapacities and distortive exports are pressuring many developing countries too

By Claus Soong and Jacob Gunter

The EU’s October 2024 tariffs on imported China-made electric vehicles (EVs) raised a debate in Europe about the level of market distortions coming from China’s exports, as well as fears about how Beijing might respond. Around the same time, Canada and the United States also opted for higher levies on Chinese EVs, and Washington imposed tariffs on several other goods too. So far, the discussion about managing market distortions from China’s exports has focused on these responses by wealthy G7 countries. Yet middle income and developing countries are also dealing with China’s surging exports, though their responses have received far less attention.

This edition of the Global China Competition Tracker aims to bridge that gap by tracking measures taken by some of the “G50” – the world’s 50 largest economies – and Beijing’s response. 

It contains an overview of Beijing’s response patterns, and case studies of eight countries: Four Southeast Asian countries (Vietnam, Malaysia, Thailand, and Indonesia) which have been grouped into a regional comparison, as well as Mexico, Turkey, Brazil, and South Africa.

The trade protection measures taken by “G50” countries include: 

• Raising high barriers to a range of imports from China, something Mexico has done to cement its US economic ties keeping the door open for Chinese greenfield investment
• Leveraging tariffs to attract greenfield investment, as Turkey did with EV tariffs
• Mitigating distortions impacting lower-end production or commodities, as Indonesia did to protect their local industry, while leaving untouched higher-value goods that Indonesia does not yet produce 
• Managing distortions across a wider range of basic and advanced industries, as Brazil has done with steel to EVs, while avoiding risks to its own commodity exports to China
• Protecting domestic retailers from China’s ecommerce giants with measures covering small scale imports, as has been done by South Africa, Vietnam, Thailand, and Brazil
• Doing little or nothing and instead embracing the cheap goods that China’s overcapacities and subsidies bring to their economy, as many have done, including developed liberal economies like Australia or New Zealand and developing countries like Bangladesh or Tanzania 

The wide range of measures taken by countries with their own unique mix of economic and political interests towards China shows the growing international concern caused by China’s economic model, subsidies, overcapacity, and surging exports. It also demonstrates key trends of how China does and doesn’t defend its economic interests with different countries – most notably, that Beijing seems willing to incur economic losses from trade defense measures when it believes it still has considerable potential for political wins, but will fight more intensely against economic losses when convinced a country is politically lost to them.