See: How China holds international trade in its greenhouses

In January 1998, the French monthly Le Monde Diplomatique published an article titled “China takes world trade hostage”. In the context of the 1997 financial crisis, Stephen S. Cohen’s article postulated that China, “stripped of its old ideology”, was determined to “assert itself as a world power in all fields”. In this regard, Cohen believed that China’s economic growth, especially in exports, was due to its movement towards complex manufacturing. However, this growth came at the expense of Southeast Asia, which faced the brunt of the economic crisis during this period.

More than two decades after the article was published, Cohen’s words seem to have manifested in the present; China is now a budding hegemon that is wielding not just its exports, but its overall economic strength to assert itself around the world. After China became a full member of the World Trade Organization (WTO), its integration into the world economy was rapid and its growth nebulous, as it quickly became the world’s second largest economy (in terms of GDP ).

According to data from the Lowy Institute, before 2000, the United States led world trade, with more than 80% of countries trading more with the United States than with China. However, by 2018, that number had dropped sharply to just 30%, as China became the top trading partner for 128 out of 190 countries. In 2020, China’s share of world trade was nearly 15%, third only to the EU and the US. Moreover, China has managed to maintain a positive trade balance despite its broader reach; in 2020, China recorded a trade surplus of $535.37 billion with an upward trend over the past five years. This is despite the global economic slowdown, which has led to a decline in trade between countries as well as criticism from Beijing over the COVID-19 issue.

However, Chinese integration into the international economy comes with a caveat. Although the country became a member of the WTO, it never followed in spirit the organization’s underlying values ​​for free trade. The Dragon Nation is a country that has access to open trade across the world due to WTO standards, but its own economy is what can be described as a “black box” due to decision making political and economic opaque and notoriously unreliable data provided for the benefit of the CCP.

In addition to the aforementioned internal factors acting as a magnet to unfairly tip the scales in China’s favor, there have also been concerns about its foreign trade policies. Chinese trade practices have been described as mercantilist and protectionist; mercantile, due to the tendency towards currency manipulation and increased production in surplus markets, and protectionist for the use of tariff and non-tariff barriers that act as a barrier to entry and business survival and foreign products in China. Due to WTO rules, trade is not subject to tariff barriers as often, non-tariff barriers such as import quotas and licenses have acted as instruments to restrict entry for foreign trade .

Chinese mercantile behavior also manifests itself in the form of “dumping”, that is, the sale of a good in another country at a lower price than its own domestic market. The United States and India have perhaps been the biggest victims of China’s dumping policy, especially when it comes to electrical products, aluminum and steel.

Growing discontent in the United States over the opacity of China’s trade policies and resulting high deficits has sparked the U.S.-China trade war, which has shed light on the question of the nation’s entrenchment Asian in global supply chains. The scrutiny has further intensified due to the COVID-19 crisis, where China has held a ransom from bilateral trade relations to deflect any questions or allegations against it about the origins of the pandemic. This has led several countries to reassess their dependence on China for their supply chains.

An example of this can be seen in a recent report which details India’s exposure and overreliance on China. According to her, five major Indian companies, active in sectors ranging from automobiles and household appliances to pharmaceutical and chemical industries, depend heavily on China for their business activities. This may be due to reliance on market revenue in China (Tata Motors earning 80% of the revenue of a subsidiary that sees China as a key market), product manufacturing, or their auxiliaries ( VIP luggage of which 50% is made in China, Voltas according to Compressors and controllers made in China), raw materials (India imports more than 63% of its total pharmaceutical imports from China), or participation and investments in the main sectors. Yet the actual Indian presence in China is limited and the trade deficit is in double digits in favor of China.

For India, the issue has major geostrategic implications due to border issues, but the South Asian country should also be treated as a sobering example of how Beijing has sunk its claws into various countries to little cost to itself. Yet despite growing examples of antagonism, coercion and corruption by the Chinese government and its representative companies during the COVID pandemic, Chinese trade with South Asian countries (including India, despite political attempts against it) continued to grow.

The Center for Strategic and International Studies, in this context, urged international actors to “repel Chinese economic coercion”, including in trade relations. However, this requires China to loosen its grip on global supply chains, which will require redirecting industrial and commercial units to other countries with similar capabilities. The United States, Japan and France have already begun to take active steps to encourage their respective companies to rely less on China to manufacture the world’s smartphones, medicines and other products. Still, this can be expected to be an uphill battle; China’s size as a global producer, as well as its market, means companies tend to be ambivalent about the predatory nature of Chinese business practices.