This year, the backdrop of the annual Canton Fair in Guangzhou cowed by as many as 30,000 Chinese businesses diligently hawking their wares. This dynamic, bustling trading hub could just as easily symbolize the growing trade chasm opening up between the US and China. This giant show, covering exhibition floors larger than 200 football fields, has become an essential marketing platform for Chinese exporters. The US has enacted a mind-boggling 145% tariff on all imports from China. As a consequence, many of the participants are now facing their own economic insecurity.
Tariffs have skyrocketed, leading to a growing mountain of Chinese goods meant for American families to stack up on factory floors. This back up poses an existential threat to the livelihoods of millions. In total, we buy more than $400 billion worth of goods from China every year. This massive trade makes China a crucial partner for American business. Still, the possibility of losing this crucial partnership hangs heavily over Chinese manufacturers and American workers.
China’s economy is the most export-dependent in the world, with exports making up about 50% of China’s economic growth. Estimates suggest that between 10 and 20 million people in the country are employed in industries focused on US-bound exports. With the trade war intensifying, these workers now face an uncertain future as orders dwindle and factories struggle to maintain operations.
Recent developments in the trade conflict have not only hurt Chinese exporters, but carry much larger and more dangerous implications for the US economy. In fact, economists are sounding the alarm about a looming recession in the US as a result of the trade war. It would only deepen the pain already felt on either side of the Pacific.
As you walk around and talk with Chinese entrepreneurs and laborers at the Canton Fair, you can hear their frustrations pouring out on the challenges they are experiencing. A worker, who preferred to remain anonymous, shared his bleak outlook:
“Things are not going well.”
Another worker highlighted the impact of both the Covid pandemic and the ongoing trade war on his earnings:
“We’ve had problems since the Covid pandemic, and now there’s this trade war. I used to be paid 300-400 yuan ($40-54) a day, and now I will be lucky if I get 100 yuan a day.”
The fair itself—an annual showcase since its launch in 1957—typifies this spirit, traditionally signaling positive news for global trade and investment. This year’s event demonstrates a landscape clouded by uncertainty. As industry leaders, companies, and municipalities work to navigate this post-pandemic landscape, there is still optimism among attendees that the situation can be resolved soon. Lionel Xu, a participant at the fair, expressed a cautious optimism:
“Maybe it will get better in one or two months. Maybe, maybe.”
Together with its rich cultural diversity, China’s enormous population of 1.4 billion people provides a wide-reaching domestic market. Yet, for millions of middle-class families who bought homes with investments, property values have dropped significantly over the last four years. This downturn adds another layer of difficulty for those hoping to navigate the turbulent waters of the current economic climate.
At the same time, Chinese manufacturers are facing a worsening inventory crisis and declining demand from their largest trade partner. One, they are under tremendous triple bottom line pressure to enter new markets or change their product lines. The grim reality of the tariffs has made them alter their business plans. They are waiting with bated breath these days in the Middle East for a calming of tensions between the two countries.
Leave a Reply