The Devastating Consequences of China’s Overproduction

A tsunami ​of cheap Chinese​ imports is flooding the domestic market,⁢ causing industries to falter, companies to collapse, and factories to close forever. The livelihoods of countless families are being destroyed, and this may explain the original “China shock,”⁣ the long-term consequences of America’s “free trade” policy with China, which led to the loss of 2.4 million jobs in the United States between 1999 and 2011.

This phenomenon is not limited to⁢ the United States. A‍ massive oversupply of essential industrial inputs and high-value goods due to overproduction in China is ⁤affecting countries⁣ around the world. In Latin America, the sudden influx of Chinese ‌imports has pushed Brazil’s chemical industry to an all-time low, and​ Chile’s only steel ⁢mill has closed. In Asia, India and Vietnam are exploring various market disruptions. In Europe, ‍British machine manufacturers have had to sell their products at a loss, and Chinese cars have taken over a ⁣third of the‍ EU electric car market in less⁤ than ​five years.

This “China Shock 2.0” could devastate many national economies. Experts say the impact could be “more profound” than‌ the⁤ first China shock‌ because it involves industries more critical to the country’s survival. Gone are the days when China’s manufacturing ambitions were ⁣limited to cheap toys and clothing. ​Today, Beijing⁣ openly touts its⁢ goal of establishing‍ China as the sole ‍supplier of goods and high-tech products that other countries cannot function without.

However, the elites around ⁤the world who are invested in the economic status quo ⁣are determined to do nothing. German ​Chancellor Olaf Scholz and Spanish Prime Minister Pedro Sánchez are⁢ examples of leaders who are undermining the‌ EU’s plans to impose tariffs on Chinese electric cars. The auto industries in these countries stand to gain short-term benefits from car⁣ sales in China and from Chinese investment ⁣in their own electric car companies.

The International Monetary Fund (IMF) also supports “open, stable and transparent trade policies” that are the opposite of China’s export dumping. However, IMF economists ⁤blame Beijing’s industrial policies for the COVID-19 pandemic on “macro factors,” while chastising the United States for defending domestic production. ⁢This is due to the institution’s bias towards Beijing’s membership and its economists ⁢being blinded by free-trade fundamentalist⁣ teachings.

China’s overproduction is no accident. The Chinese Communist Party set out to dominate global trade in ‍essential industrial inputs and high-value goods nearly a decade ago. According to recent research, ⁢Beijing has ​near-complete control over the supply chains of industries that will define the 21st century. This poses a threat to countless⁣ non-Chinese companies and the working families who depend on them around the world. It also⁤ threatens U.S. national security, ​as the more we ⁢rely on major adversaries for our critical goods, the more likely it is that our enemies will be able to cut us off from them.

The Chinese ⁣Communist Party is already exercising this power through new restrictions on antimony, a metal essential ⁢to the production of ⁢many military goods, including bullets, missiles, and nuclear weapons. Half of the​ world’s supply comes⁤ from China, meaning Beijing’s new trade restrictions are deliberately disrupting our defense industrial base.

To secure our economic independence, we must challenge China’s⁢ domination. We need to invest more in domestic production, find non-Chinese sources of key ⁣inputs, deregulate our repressed ⁤manufacturing‍ sector, and‍ raise tariffs ⁤on ‌Chinese imports. We need ⁢to make sure that ⁤these tariffs also apply to Chinese companies ⁣that try to avoid them⁤ by opening⁣ stores ‍in third countries like Mexico. And we must strengthen protections against Beijing’s espionage and intellectual‍ property theft.

Other countries should do⁣ the same. Evidence suggests that “free trade” with China is a one-way ticket to industrial collapse, corporate bankruptcies, widespread unemployment,⁤ and security dependence on power-hungry ‌dictatorships. Whatever the leaders hope to gain by riding the tiger, and whatever value the elites see in simply accepting a second China Shock, no short-term gain will be worth⁢ the terrible⁤ cost.

Marco Rubio ⁣(R) is a United States Senator from Florida.