China recently announced it would impose an export licensing regime on around 300 steel products starting January 1. The move, while seemingly technical, sends a clear signal Beijing is attempting to address a key source of trade friction with its emerging market partners.
To understand the policy’s intent, it needs to be placed in the broader context of China’s trade position this year.
As global trade protectionism intensifies, China’s exports have shown remarkable resilience. Even as shipments to its largest export destination, the United States, fell by 18.3 per cent year on year in the first 11 months of this year, China’s overall exports still grew by 6.2 per cent. This outcome reflects not only the adaptability of Chinese companies, but also a deliberate recalibration of export strategy.
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Part of that resilience has come from the strength of higher-tech exports, including electric vehicles, batteries and solar equipment. But equally important has been China’s pivot to emerging markets – especially Southeast Asia, Africa and Latin America – where trade barriers remain lower and demand growth stronger. For China, these markets increasingly determine whether its export engine can continue to run amid mounting headwinds from advanced economies.
Yet these relationships are becoming increasingly delicate. Granted, most emerging economies have not adopted an openly adversarial stance towards China. Still, trade frictions are clearly accumulating, and steel has become the most visible flashpoint.
From early last year through September this year, China faced some 54 trade remedy cases targeting its steel exports – more than in the previous five years combined. Last year alone, countries including Brazil, South Africa and Turkey imposed new anti-dumping duties on Chinese steel products. This year, Vietnam and Malaysia – China’s largest and third-largest trading partners among developing countries – followed suit with similar tariffs.
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