the world will experience a second “Chinese shock” with an abundance of cheap goods – Kommersant

To solve economic problems, China is increasing the production of goods that exceed domestic demand, the newspaper reported. Wall Street Journal. Countries around the world will experience a second wave of Chinese imports. The last wave of Chinese products led to the bankruptcy of some factories in the West.

The world economy 20 years ago, in the late 1990s and early 2000s, experienced the “Chinese shock” – a sharp influx of cheap products from China. Economists say the situation could soon be repeated as Beijing ramps up exports to revive its economy. Chinese factories already produce more cars, consumer electronics and appliances than are needed for domestic consumption. In the first wave, increased exports helped China keep inflation low. Economists expect the deflationary effect to be stronger the second time around because it will not be offset by Chinese demand for commodities.

The first “China shock” lowered the prices of goods in the United States, but led to the fact that from 1999 to 2011 more than 2 million people lost their jobs as manufacturers of furniture, toys and clothing could not cope with the competition. The EU countries, the USA and Japan, not wanting a repeat of the situation, have allocated billions to support production, and are also considering the possibility of increasing duties on Chinese goods. According to economists, a repetition of the situation would have a more destructive effect, since China now competes in the production of high-tech products.

In 2023, China’s economy grew by 5.2%, which is low by country standards. China’s economic growth will slow to 4.5% or more in 2024, economists have predicted. They believe that China faces “secular stagnation.”

Read more about Russian import substitution from China in the material “Import at risk”.

Alexandra Goroshilova