How China Gains from “Dumping”
Definition of Dumping
Dumping occurs when a country exports goods at prices lower than their normal domestic value-often below cost-to gain market share abroad. Critics argue that dumping allows exporters to undercut local producers, shifting the market balance and potentially driving competitors out of business. Governments and exporters may finance these low prices via subsidies or through economies of scale supported by state backing.
China’s Cheap Labour & Diversification Strategy
China’s industrial strength rests heavily on cheap labour, enabling manufacturers to produce goods at ultra-competitive price points. Combined with massive overcapacity in sectors like steel and solar panels, China floods global markets with inexpensive exports—effectively a form of dumping. This deep price pressure undermines competitors in countries such as India, the US, and EU markets (The Wall Street Journal).
Simultaneously, China’s strategy of diversification—exporting goods across numerous global regions and scaling its manufacturing—spreads risk and sustains dumping practices. The China‑Plus‑One approach, however, is now spurring international firms to diversify beyond China into economies such as India and Vietnam. (Wikipedia)
China’s BRI Strategy, Soft Loans & Debt Trap Diplomacy
Through its Belt and Road Initiative (BRI), China provides infrastructure finance—often classified as soft loans—to developing nations. These loans appear concessional but often come with strict conditions and collateral requirements. Critics call this debt‑trap diplomacy, where inability to repay gives China leverage or control over assets (e.g., Hambantota port in Sri Lanka or railway in Kenya).
A report notes that low‑income nations face a “tidal wave” of debt repayments—about $22 billion owed in 2025 alone—and many have become economically dependent on China (The Guardian). These financial arrangements facilitate dumping by locking recipient countries into trade dependence and creating new markets for Chinese exports.
Competition with India and the US
China’s dumping, backed by its soft‑loan powered market expansion, directly challenges India and the US. In sectors like steel, solar panels, electronics, and even EV batteries, Chinese pricing makes it difficult for Indian manufacturers to compete. Japanese steel producers have petitioned for anti‑dumping duties, citing steel imports up to 50% cheaper than domestic prices (The Washington Post).
The Made in China 2025 initiative further accelerates China’s industrial dominance—boosting technological capability in EVs, semiconductors, and robotics—making Chinese goods both cheaper and more advanced, intensifying competition with U.S. and Indian industry (Wikipedia).
India Can Learn Lessons
For India, there are key takeaways: first, resist dumping via stricter anti‑dumping investigations and targeted tariffs. Second, embrace diversification: incentivise domestic manufacturing, attract investment under China‑Plus‑One, and reduce dependence on Chinese imports.
India’s own strategic financing initiatives—like lines of credit for neighbour nations—should emulate transparency and sustainability, avoiding opaque BRI‑style deals. India can project soft power without ensnaring others in debt traps. Initiatives like SAGAR, Quad, and infrastructure funding in neighbouring states can foster equitable collaboration.
Other Implications
- Global trade distortion: Dumping distorts fair competition and leads to retaliation and trade barriers, potentially reducing export growth for all.
- Geopolitical leverage: Through soft loans and debt dependency, China strengthens its geopolitical influence, often at the expense of recipient country sovereignty.
- Market overcapacity: Excess Chinese capacity—steel, solar, manufacturing—forces markets downward, triggering anti‑dumping probes globally, notably in Japan, the EU, and the US.
- Strategic imbalance: As China secures infrastructure and trading dominance, rivals like India and the U.S. face heightened strategic competition in Asia‑Africa‑Middle East corridors.
In Summary
China’s dumping of goods—enabled by cheap labour, state-backed subsidies, diversification, and supported by its BRI soft‑loan and debt‑trap model—enables export dominance. It directly challenges domestic industries in India and the US, reshaping global supply chains.
India must respond with anti‑dumping measures, strategic industrial policy, and diversified investment routes such as China‑Plus‑One for both protection and growth. At the same time, India can offer an alternative model of sustainable, transparent financing in contrast to opaque BRI deals.
China gains trade dominance and geopolitical influence by tying debt to markets and infrastructure control. Recognising these dynamics, India and other nations can better defend their industries, protect sovereignty, and forge fairer global trade.
Abbreviations
BRI – Belt and Road Initiative
EV – Electric Vehicle
SAGAR – Security and Growth for All in the Region
