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Rapidly growing Chinese tax evasion for export "laundering". As a result of international sanctions, Chinese predatory practices are intensifying


New York Times: risk of global countermeasures. According to statistics, the total value of China's exports in January and February this year increased by 7 percent compared with the same period last year, which has led to a blow to the manufacturing workforce in Europe and South Asia. The impact of China's mercantilist innovation practices and, in particular, declines on the global economy has been profound. The share of China's global output from high-tech manufacturing industries rose from 8% in 2003 to 27% in 2018. China has now become the world's largest exporter of high-tech goods, with a global share of around a quarter, not just for low-value-added goods.




In recent years, in the face of trade restrictions adopted mainly by the United States and the European Union, components produced in China have begun to succeed commercially with the "recycling" approach, that is, exploiting access to external export channels and reducing the tariff burden.


Photo: NYT

In this way, China's manufacturing industry has grown significantly, promoting increased employment in the homeland.


This new predatory practice, however, will soon lead to a contraction of the labor market in Europe and the South Asian region, with the risk that the "victim" countries may also take appropriate countermeasures.


According to the New York Times, "the continued growth in global demand for products such as steel, automobiles, consumer electronics and solar panels has given China's supply industry a booming market and helped offset the negative impact of the slowdown in economic growth due to the weak housing market, but many countries are concerned that the increase in Chinese products is being built on a price paid by other countries, and as a result, all parties have begun to devise countermeasures to counter it".


The report points out that Chinese products often avoid tariffs through "origin reshuffling," making use of assembly operations in countries such as Vietnam, Malaysia, and Mexico to create the illusion that products do not come from China, and by obtaining partial tariff reductions or even total tariff exemption for sales to U.S. and European markets.


This results in the continued expansion of the ciense market even with the benefit of low prices.

According to statistics, the total value of China's exports in January and February this year increased by 7 percent compared with the same period last year, which has led to a blow to the manufacturing workforce in Europe and South Asia.

In response, the European Union announced last week that it was preparing to impose tariffs on electric vehicles imported from China, pointing out that there were substantial indications that Beijing authorities were increasing the competitiveness of Chinese products through illegal subsidies, and that it was also considering imposing restrictions on the import of wind turbines and solar panels from China, while India announced in September last year that it would impose a global tariff on steel produced in China.


The report cites the United Nations Industrial Development Organization (UNIDO) as saying that China's manufacturing output has reached one-third of the world total, more than that of the United States, Germany, Japan and South Korea combined, and that as a result the United States has increased trade restrictions against China in recent years.

Moreover, in his State of the Union address last week, President Joe Biden vowed to "ensure that advanced U.S. technology is not acquired and used by China."


An analysis by Brad Setser and Michael Weilandt of the New York-based think tank Council on Foreign Relations (CFR) shows that compared to the global economy, China's export of manufactured goods is now more than double that of Japan in the 1980s.


Chinese Minister of Commerce Wang Wentao, on the other hand, recently quoted an International Monetary Fund (IMF) report during China's "Two Sessions," pointing out that the total number of global trade restrictive measures will be about 3,000 in 2023, much higher than the 1,100 in 2019, and that most of them will be aimed at China, highlighting the fact that global countermeasures against Chinese products are gradually increasing.


Predatory mercantilism


As has been pointed out, China's rise as a manufacturing superpower is the result of the shift, starting in the 1970s, of global value chains from the most advanced economies to Asia and, subsequently, from 2000, from Asia to China.


Since Beijing's accession to the World Trade Organization (WTO) on December 11, 2001, U.S. and European multinationals have increasingly relied on its low-cost labor force to produce and export cheaper finished products, especially in manufacturing sectors advanced and high-tech.


The movement of these chains has brought undoubted advantages, such as lower prices for consumers and greater profits for companies.

In 2021, bilateral trade between the United States and China continued to grow, with increased imports pushing the US trade deficit in goods to $32.3 billion.505 The total volume of increased bilateral trade in goods reached 594.5 billion dollars, compared to 502.8 in the same period of the year.


China has a central role as an engine of globalization it also led to a rapid expansion of economic ties with the EU. Between 2000 and 2019, trade volume increased almost eightfold, reaching 560 billion euros. China is now the EU's second largest trading partner after the United States.


Globalization, however, has also brought “hidden costs,” what the US calls the “China shock”: significant job losses, crucial supply chains dependent on Beijing, and Chinese industrial global dominance, especially in critical manufacturing sectors. high technology.

Between 2001 and 2018, it is estimated that the US alone suffered job losses of between 3.4 and 3.7 million workers.


Furthermore, in key sectors such as telecommunications, electronics and information technology, they have ceded to China a domestic market share estimated at between 40% and 60%.


The EU is also heavily dependent on China, especially in electronic components and pharmaceutical products.


These dramatic effects, however, are not the accidental consequence of open markets and free trade, but the result of a strategy by Beijing, deliberately implemented to achieve global hegemony to the detriment of the rest of the world. China, in fact, uses the economy as leverage to achieve geopolitical objectives.

Over the past twenty years, Beijing has led, by any means, a commercial war (including) to erode significant slices of the economy of many states in order to weaken them and make them dependent or politically influenceable.


The impact of China's mercantilist innovation practices and, in particular, declines on the global economy has been profound. The share of China's global output from high-tech manufacturing industries rose from 8% in 2003 to 27% in 2018.
China has now become the world's largest exporter of high-tech goods, with a global share of around a quarter, not just for low-value-added goods.

The average value that China adds to its exports is 76% in the US, while in the European Union it is 87%. Beijing's huge trade surpluses with the United States and with the rest of the world they have swollen its foreign exchange reserves, which grew from $212 billion in 2000 to $4 trillion in August 2015 and just over $3.2 trillion today.


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