WASHINGTON (AP) \u2014 For eight years, the United States has waged economic war on China, slapping big taxes on Chinese products before they enter America.<\/p>\n
But the campaign hasn\u2019t dented China\u2019s industrial prowess.<\/p>\n
The world\u2019s second biggest economy is exporting more products than ever. It\u2019s just redirecting them away from the U.S. tariff wall and toward more open markets in Europe and elsewhere in Asia.<\/p>\n
The shift in Chinese trade risks creating a European sequel to the China Shock that wiped out hundreds of thousands of factory jobs in the American heartland in the 2000s and contributed to the political upheaval that put Donald Trump in the White House twice.<\/p>\n
Despite U.S. sanctions, China last year notched a record global trade surplus \u2014 an astonishing $1.2 trillion.<\/a><\/p>\n Earlier this year, French President Emmanuel Macron warned that Chinese exports are \u201cliterally killing a large part of the European industry\u2019\u2019 and admitted that Europe was \u201cslow to see that.\u2019\u2019<\/p>\n The Europeans are clear-eyed now. China\u2019s trade practices will be near the top of the agenda this week as leaders of the G7 rich democracies gather in \u00c9vian-les-Bains, France<\/a>. In briefings last week, French officials indicated that they hope to come out of the summit with a plan to tackle the China threat.<\/p>\n One possibility is that the European Union and others will build a higher tariff wall of their own against Chinese imports. Currently, the EU imposes relatively low tariffs on China under World Trade Organization rules \u2014 though it hits specific Chinese products with higher ones (up to 35% on electric vehicles, for example).<\/p>\n \u201cChina\u2019s export surge, unless its leaders rein it in, will provoke a protectionist wave against Chinese imports worldwide,\u2019\u2019 said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund. \u201cAll the more so if the current disruptions around the Iran war persist and cause a sharper global slowdown.\u2019\u2019<\/p>\n Economist Taylor Wang at HSBC warned this month that a China-EU trade dispute could threaten Chinese exports; Europe accounted for a big share of China\u2019s exports of electric vehicles, solar panels and lithium-ion batteries.<\/p>\n The Europeans also hope to persuade Trump to stop targeting U.S. allies like the European Union and Canada with punitive tariffs and to start working with them instead to counter China. <\/p>\n <\/p>\n \n Sign up for Morning Wire:<\/strong> China Shock 2.0 is different \u2014 and more disruptive<\/p>\n The first China Shock started around 2001 when the Chinese joined the World Trade Organization and gained low-tariff access to the lucrative markets of the United States and Europe. In the United States, many factories couldn\u2019t compete with low-cost Chinese textiles, furniture, electronics and other manufactured goods.<\/p>\n
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