China needs new strategy to counter US moves on global trade, analysts say

Washington’s efforts to divert international supply chains from China are already making enough of an impact to drive recommendations for a new game plan from analysts and manufacturers, in their view an essential step to counter a fragmentation of trade that is already under way – and likely to worsen in the coming years.

“The US strategy, despite the interruption of the coronavirus pandemic, is generating results,” wrote Liu Yuanchun, a prominent government adviser, in an article for Beijing Daily published last month.

“We must have deep analysis of the geopolitical situation and economic strategies.”

Liu, head of the Shanghai University of Finance and Economics, said subsidies provided through laws like the United States’ Infrastructure Investment and Jobs Act, Inflation Reduction Act and Chips and Science Act will continue impacting exports from China to the US and European Union.

“China’s competition with Japan, South Korea and Germany is already [heated], especially in the areas of new energy, vehicles and shipbuilding,” he warned.

“Therefore, China may have to go through some intensive adjustment with these countries that recorded trade deficits with us.”

14:45

An unwinnable conflict? The US-China trade war, 5 years on

Liu also called for more endeavours to tap opportunities in emerging markets, building on a trend that has already begun.

Chinese exporters have stepped up their operations in Mexico and Southeast Asia, both to explore alternative customer bases and as a back door into the US market. Last year, trade value between China and Mexico rose 6 per cent from the year before to reach US$100.2 billion.

Liu’s warning came as US politicians have ramped up their rhetoric around China in the run-up to November’s