Concerns have been raised that the excessive production of low-cost products in China, which is experiencing an economic downturn due to sluggish domestic demand, may shock the economy of the Asia region.
CNBC reported on the 9th (local time) that "China's producer prices have shown deflation for over two years, and there is almost no increase in consumer prices," adding that "if China strengthens its manufacturing under these circumstances, the effects of overproduction will impact the global market."
CNBC warned of the "China shock" that affected the global economy in the early 2000s. While the influx of low-cost Chinese products led to reduced inflation, neighboring countries' manufacturing lost competitiveness, causing unemployment rates to soar. China has recently been increasing the production and export of low-cost products to overcome the domestic slump, suggesting that similar conditions to those at that time are being met recently.
In fact, China has been experiencing a trade war with the United States, resulting in a decrease in trade volume with the U.S., while increasing exports to nearby Asian countries. From the beginning of this year until April, China's exports to the U.S. decreased by 2.5% compared to the same period last year, but exports to ASEAN countries increased by 11.5%.
Eswar Prasad, a professor at Cornell University in the U.S., noted, "The world is concerned that it will be swept up by Chinese exports," adding that "many countries are showing movements to restrict imports from China."