Economist discusses the challenges that China's export sector is facing

On the export side. Western countries talking about over capacity risks as well as, you know, increasing trade barriers. How much of that could be an impediment because China is right now banking on its exports. That’s right. I think that’s increasingly becoming a challenge for Chinese, the export sector because you know the Chinese exporters are working on a very low cost base, getting substantial comparative advantage against the foreign competitors. So I think as a result, you know you’re seeing you know Chinese CVS are taking global market shares, Chinese. Manufacturing sector value at as a percentage of global manufacturing sector is actually also rising as well despite all the tariffs. So that it’s really showing you, you know this huge cost advantage in the Chinese manufacturing sector. And also in the past couple of years, you know because of the tariff that is being imposed on the Chinese exports, the Chinese manufacturers has been offshoring you know some of their manufacturing facilities to Southeast Asia’s you know to bypass the tariff and and all that. So I think you know at this juncture as you can see, you know one of the focus, key focus of Yellen’s visit to China was you know to discuss over capacity situation with China. So I wouldn’t be too surprised to see you know even more tariffs or more trade frictions in the coming months. Which also explains why all of the the European firms are shifting their investments to the ASEAN countries because China’s doing the same thing. And it’s funny how that aligns, but but I’ve got to ask you, you know, we talk every day about the the, the prospect of tariffs getting slapped on EVs and obviously EVs is going to be such a a big growth engine for China moving forward. But do you think if we were to see those tariffs, I’m not saying the Chinese EV industry would collapse, but do you think that that’s when we’re going to see massive consolidation because that would lead to an abundance of. Supply coming on, but just I suppose weaker demand. Yeah, I am inclined to agree with you. Domestically, you know we’re seeing even though the EV sector is growing exponentially, but there’s obviously substantial overcapacity in the sector. So if you look at the domestic EV price, you know it’s it’s coming down really fast. Nowadays it costs you around 70,000 Chinese Yuan to buy an EV and cost you 88, almost CN¥90,000 to buy a Chanel handbag, right. So that is really telling you that you know the, the, the the guys in in China really competing on a low cost base. So I think you know if foreign demand will be curbed because of new tariffs that that is being imposed. The European governments are already working on that. Then I wouldn’t be too surprised to see the domestic price competition, the price was in the domestic EV sectors is set to intensify and it’s already happening.