The article discusses the impact of China’s “deflation offensive” on the global market, particularly on Korea’s car industry. China’s export-driven economy has led to a surplus in production, causing a flood of products into foreign markets. This has resulted in disruption to local industries, including steel, petrochemicals, and solar energy. Now, the effects are reaching Korea’s auto market, with Chinese car maker BYD launching an electric vehicle at a competitive price point of 30 million won (around $20,570). This has put pressure on the local industry, with some calling for higher tariff walls to protect the domestic market.
China’s economic structure is characterized by a low domestic consumption rate, with consumer spending accounting for only 55% of GDP, compared to 70-80% in advanced economies. This has led to a surplus in production, which is exported to foreign markets. The government has played a significant role in driving economic growth by providing land and bank loans to companies, but this has created an imbalance in the economy.
As a result, China’s “deflation offensive” has become a global issue, with 160 trade disputes in 2022 involving Chinese products, affecting 28 countries. The Chinese government claims its trade practices are legitimate and the result of corporate innovation, but critics argue that the fundamental issue is the economic and industrial structure, which generates deflation. The article concludes that the Korean government may need to consider measures to address the impact of China’s deflation offensive on the local industry.