Trend China's weak domestic demand and strong supply capacity push low-price exports

Summary

The report sees China's domestic recovery held back by a prolonged property adjustment and weak private investment, while its manufacturing and high-tech supply capacity remains intact. This combination may lead China to cushion its slowdown by expanding exports of low-priced manufactured goods. Low Chinese inflation and high supply capacity would intensify price competition abroad. That could in turn provoke additional trade restrictions and anti-dumping measures from the United States, Europe and other major economies, adding to trade uncertainty. For Korea, the report treats the resulting price competition in major export markets as a source of pressure separate from changes in US policy.