Nomura Securities recently published a research report pointing out that as the US-China trade war is fully underway, many emerging economies, especially Asian countries, are facing the impact of a surge in cheap imports from China.
The report pointed out that considering China's annual exports of products reaching US$560 billion, it will need to find new markets. Nomura chief economist Rob Subbaraman's team, after comparing the domestic manufacturing output of 45 countries and their import share from China, concluded that the countries where the proportion of Chinese commodity imports has increased the most in the past few years are usually the countries where the domestic manufacturing industry has slowed down the most.
The report explains that since Trump's first term, the proportion of Chinese products in US imports has dropped from 25% in 2017 to 16% in 2024, but China's manufacturing exports in the global market remain at a high level of 15%.
This means that after Trump's first term, highly competitive Chinese manufacturers either exported their products to the US through third countries or expanded into new global markets to offset lost US orders. Local manufacturers in countries outside the US—from German electric vehicles and Brazilian steel to Vietnamese toys and Indian electronics—are facing increasing competition from Chinese imports.
As the United States tries to plug the loopholes that allow Chinese goods to bypass third countries, cheap Chinese goods may flood into these countries. This will cause very serious damage to emerging economies, especially Asian countries, and trigger more serious trade imbalances, stronger deflationary pressure, and greater fiscal spending.
