A staggering $1.9 trillion in extra industrial lending is fueling a continued flood of exports that could be spread even wider across the world by the Trump tariffs.
For decades, the world’s largest car factory was Volkswagen’s complex in Wolfsburg, Germany. But BYD, the Chinese electric carmaker, is building two factories in China, each capable of producing twice as many cars as Wolfsburg.
Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. On the fringes of cities all over China, new factories are being built day and night, and existing factories are being upgraded with robots and automation.
China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.
“The tsunami is coming for everyone,” said Katherine Tai, who was the United States Trade Representative for former President Joseph R. Biden Jr.
President Trump’s steep tariffs announced on Wednesday, which have caused stocks in Asia and elsewhere to plunge, were the most drastic response yet to China’s export push. From Brazil and Indonesia to Thailand and the European Union, many countries have already moved more quietly to increase tariffs as well.