The Global Economy Faces Devastation from China’s Trade Manipulation

A significant increase in low-cost imports from China floods the national market.

Industries struggle, businesses collapse, and factories shut down permanently.

The livelihoods of numerous families fall apart.

This scenario mirrors the original “China Shock,” the lasting impact of the United States’ policy of “free trade” with China, which led to the loss of 2.4 million jobs between 1999 and 2011.

It also reflects the current situation worldwide: a massive surplus of crucial industrial components and high-value products due to Chinese overproduction.

Examples include Latin America, where an abrupt surge in Chinese imports has caused Brazil’s chemical industry to hit rock bottom and forced Chile’s last remaining steel mill out of business.

Similarly, in Asia, India and Vietnam are grappling with various market disruptions.

Furthermore, in Europe, UK machinery manufacturers are selling their goods at a loss, and Chinese-made cars have captured a third of the EU’s electric vehicle market in less than five years.

This new wave of the “China Shock 2.0” has the potential to devastate multiple national economies.

Experts suggest that the impacts could be even more profound than those of the initial China Shock, as they involve industries essential for the survival of countries.

Gone are the days when China’s manufacturing goals were limited to inexpensive toys and clothing.

Today, Beijing openly aims to establish China as the primary supplier of commodities and high-tech products crucial for other countries’ functioning.

Despite this global challenge, many elites invested in the current economic system are reluctant to take action.

For instance, German Chancellor Olaf Scholz and Spanish Prime Minister Pedro Sanchez prioritize short-term gains from car sales in China and Chinese investments in their own electric vehicle companies, jeopardizing larger EU plans to increase tariffs on Chinese-made vehicles.

Similarly, the International Monetary Fund, which advocates for open and transparent trade policies, tends to blame “macro forces” instead of Beijing’s export practices, possibly due to its ties with Beijing and a bias towards free-trade principles.

The reality is that Chinese overproduction is part of a deliberate plan by the Chinese Communist Party to dominate global trade in crucial industrial components and high-value goods, as outlined nearly a decade ago.

While warnings were raised in 2019 regarding this plan, the response from the international community was insufficient and tardy.

As recent research from my office reveals, China now wields significant control over the supply chains of industries that will define the 21st century, posing a threat to countless non-Chinese companies and working families worldwide.

Furthermore, this dominance poses a national security risk to the United States, as increased dependence on a geopolitical adversary for critical goods could disrupt supply chains.

For instance, China’s recent restrictions on antimony, a vital metal for military supplies, highlight the potential vulnerabilities of relying on a single source.

Efforts to safeguard economic independence include investing in domestic production, diversifying sources of critical inputs, streamlining manufacturing regulations, imposing tariffs on Chinese imports, and strengthening protections against espionage and intellectual property theft from Beijing.

Similar measures are necessary in other countries to counter the risks associated with China’s supply-chain dominance.

Evidence suggests that “free trade” with China leads to the erosion of industries, business failures, and extensive job losses, as well as national security vulnerabilities.

Regardless of the short-term benefits leaders may see in accommodating China, the long-term costs far outweigh any gains.

Marco Rubio (R) is a US senator from Florida.