Nomura Warns of an Influx of Cheap Chinese Goods in Emerging Economies

A sudden influx of cheap goods from China could play an exceptionally deregulatory role for emerging economies, especially in Asia, causing larger trade imbalances, stronger deflation, and increased fiscal spending, according to Nomura’s analysis. For 45 countries, economists at Nomura led by Rob Subbaraman mapped the share of Chinese imports in local manufacturing production (e.g., Asia), finding that economies experiencing the largest increases in Chinese goods tended to see the sharpest slowdowns in local manufacturing. They also observed a ‘strong negative relationship’ between the share of Chinese imports and producer price inflation. The Nomura research revealed that even before Donald Trump began his second term as U.S. president, China was flooding economies with cheap goods. ‘As expected from these results, 2024 marked a significant rise in the total number of trade investigations initiated against Chinese imports at record levels, mainly in the form of anti-dumping measures,’ stated Subbaraman. ‘The results are disappointing,’ he said. ‘This year, with the U.S.-China trade war in full swing, the findings highlight how exposed economies are to the flood of cheap imports from China turning into a deluge, particularly those in Asia.’