Insights from The Wall Street Journal, Bloomberg and Nikkei Asia
The news
The European Union could impose restrictions on several Chinese online retailers, notably Shein and Temu, the Financial Times reports.
In particular, the EU is considering abolishing a rule that exempts individually wrapped purchases imported from non-EU countries and worth less than €150 ($162) from customs duties.
The bloc wants to stop what it sees as a flood of “substandard”, low-priced products from China to protect local businesses.
SIGNALS
Chinese companies’ dependence on air transport has implications for freight costs
Shein and Temu ship their packages by air, which has sent freight costs skyrocketing. It has also fueled fears of a capacity shortage when the retail season peaks in December, The Wall Street Journal reported. Air freight is typically dominated by items like phones and computers, but the two Chinese retailers are filling cargo planes with small packages of clothing and household items. “The e-commerce boom out of China has transformed the air freight market in an incredibly short time,” one analyst told The Journal. Shein and Temu aren’t the only ones being blamed for rising freight costs, though: Attacks by Houthi rebels targeting shipping in the Red Sea have also forced retailers to send more by air, driving up prices.
‘Growing momentum’ behind protectionist agenda
The proposed measure — which would require approval from every EU member state to pass — is the latest in a series of protectionist moves to curb imports of cheap Chinese goods that the EU sees as a threat to local manufacturers, particularly in the auto sector, Bloomberg noted. The efforts could be coordinated across the Atlantic: The U.S. is also considering a similar measure involving duty exemptions for “low-value personal packages,” the outlet reported.
China’s neighbors could soon join the West’s protectionist advance
The West’s protectionist agenda could serve as an inspiration for China’s regional neighbors, an economist wrote in Nikkei: “Ultimately, it comes down to protecting domestic companies and jobs. While many Asian policymakers face tough decisions, the path is clear.” The laissez-faire approach adopted by many Asian countries has presented challenges, as China’s overcapacity in several key sectors has squeezed local firms. Manufacturers in Thailand, Indonesia and South Korea have felt the pinch from Chinese goods, while entire industries such as metals and chemicals have been hit, the economist added.
