China’s overproduction problem is no longer just an economic story—it’s a crisis unfolding in factory towns around the world. While Beijing’s export engine powers on, countries from Southeast Asia to South America are watching their own industries buckle under the pressure.
The latest export shock isn’t a theoretical policy debate. In Indonesia, more than 250,000 workers in the garment sector have lost their jobs in the past two years as cheaper Chinese clothing has flooded the market. Thai auto parts factories are shutting down as Chinese electric vehicles undercut local manufacturers. In Brazil, domestic carmakers are calling for antidumping investigations into Chinese imports.
Even countries that initially benefited from shifting supply chains are now seeing the downside. Vietnam and Cambodia, once buoyed by foreign investment looking to diversify out of China, are now facing a wave of Chinese products rerouted through their ports. In some cases, these nations are being used as pass-through hubs to re-export Chinese goods, creating diplomatic tension with the United States.
Germany has seen a 20% increase in Chinese imports year-over-year, prompting alarm among automakers and industrial exporters. And while Trump’s tariffs are aimed at shielding American factories, the redirection of exports is making China’s manufacturing presence even more dominant elsewhere.
At the heart of the issue is the mismatch between China’s production capacity and global demand. With consumer appetite at home cooling, Beijing is pushing manufacturers to scale up regardless. This imbalance is triggering a vicious cycle—lower prices, squeezed margins, and a race to the bottom that many local industries cannot afford to join.
The fallout is leading to a renewed interest in protectionist measures. Some governments are exploring selective tariffs, subsidies, and local content rules to shield key sectors. But few have the scale or leverage of the U.S. or EU, leaving them vulnerable to retaliation or trade pressure from both Washington and Beijing.
China’s ability to saturate global markets—across both high-tech and low-cost goods—has rewritten the rulebook of international trade. The result is not just a reshuffling of supply chains but a fundamental reordering of which nations can produce what, and at what cost.
For now, the flood continues—and many are being forced to learn how to swim.