China tries a different tack

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the holiday edition from Interest.co.nz.</p><p>Today we lead with news China is at a pandemic turning point, forced on them by a stuttering economy. It is not necessarily a positive turn.</p><p>We are ending the year with fallout from the growing stresses over China's new pandemic management. China will <a href="http://www.nhc.gov.cn/xcs/zhengcwj/202212/e97e4c449d7a475794624b8ea12123c6.shtml" target="_blank"><strong>no longer require visitors to quarantine from January 8</strong></a>. They are emerging from three years of self-imposed global isolation under their Covid Zero policies, policies that hurt their economy and caused widespread public frustration.</p><p>With demand at home tanking, Chinese manufacturers are prioritising exports. But with Western supply chains full, and a fast-growing reluctance to rely on supply from China, the options for these suppliers are closing on them. Some are getting desperate. And prices for Chinese supply are falling very fast, even on a weekly basis.</p><p>Competitors in Asia and beyond are facing Chinese suppliers cutting prices hard. And that is making their life a misery. Trading rules (about dumping) can't respond fast enough. Prices for plastics and steel prices are at the forefront of this shift. Places like India, Vietnam, South Korea and Japan are feeling the brunt of the desperation. Chinese steel exports have risen +28% while prices have fallen -40%. The squeeze is intense. The story is similar for many grades of industrial plastics with prices down -25%. Solar panel component prices <a href="https://www.caixinglobal.com/2022-12-22/silicon-wafer-prices-fall-as-china-solar-supply-glut-looms-101980939.html" target="_blank"><strong>fell by -10%</strong></a> in just the past two weeks.</p><p>Also not helping is that the global car industry is cutting its sourcing from China, and rather quickly. The c