China Funds Overseas Trips to ‘Grab New Orders,’ Washington Calls Out Beijing for Disrupting Markets

A bank teller counts the stack of Chinese yuan and U.S. dollars at a bank in Shanghai, China on July 22, 2005. (STR/AFP/Getty Images)

Local governments in China are aggressively funding delegations to drum up business overseas. Large groups including Chinese city and business officials have made hundreds of trips abroad since early December in search of foreign investment.

Meanwhile, a recent U.S. trade report called out Beijing for continuing to give Chinese companies an unfair advantage and says Washington will protect the competitiveness of U.S. companies.

As local governments scramble to hit growth and employment targets, authorities are introducing financial subsidies for foreign trade companies to go overseas to “grab new orders, expand the market.”

That slogan was shouted by a 200-strong delegation from Jiangsu in December as it boarded a private jet to Europe, in online footage posted by the local government.

Local Government Initiatives

According to an article published on the official website of the Jiangsu provincial government on April 3, since the beginning of 2023, “enterprises across the province have been in a rush to go overseas to ‘grab orders.” The article boasted about preferential policies that benefit Chinese companies, enhancing their representation in international markets with “hard power.” Jiangsu is a major manufacturing province and has ranked near the top in industrial output for many years.

Local governments across China are backing similar efforts. The Shaanxi provincial government announced on March 28 that it will subsidize booth fees and transportation costs for international trade exhibitions. Shaanxi authorities are offering subsidies of up to 1 million yuan (about $150,000) to companies that exported more than $65 million in 2022.

Shanghai’s Huangpu District also announced policies on March 28 to support enterprises participating in exhibitions overseas, offering subsidies of up to 50 percent of booth fees to eligible companies.

A vessel transports containers along the Huangpu River in Shanghai on March 5, 2021. (Hector Retamal/AFP via Getty Images)

Huzhou, a major silk-producing center, has organized “100 Market Expansion Groups and 1,000 Enterprises,” an initiative to compete for orders. “City Fires the ‘First Shot’ to Grab International Orders,” reads the headline on the city’s website, announcing that Huzhou plans to send more than one hundred delegations overseas this year.

Trips Began Mid-2022, Surged After Opening Up

Local governments in China began organizing charter flights for trade merchants even before China dropped its zero-COVID restrictions in December of 2022. The first business charter flight, funded by Ningbo, a city in Zhejiang Province, left for Europe on July 10.

After China’s zero-COVID policies were relaxed, government-funded trade trips increased dramatically. By December 2022, Ningbo had organized 263 such trips, and at least eight provinces had organized trips in search of overseas orders.

Over the past few months, hundreds of delegations have traveled abroad in search of business, often accompanied by local government officials.

Lines of trucks are seen at a container terminal of Ningbo Zhoushan port in Zhejiang province, China, on Aug. 15, 2021. (cnsphoto via Reuters)

Government Efforts Won’t Halt Export Crisis: Experts

Despite these efforts, China’s exports fell 6.8 percent from a year earlier in the January-February period, according to official data. Economist Li Songyun told The Epoch Times on April 4 that the real reason is not global demand, but a re-direction in the manufacturing supply chain.

Support from Chinese Communist Party (CCP) authorities—enabling local companies to attend overseas trade fairs, visit customers, and solicit orders—is not the answer, Li said. It does not address the biggest reason for weak Chinese exports, which is not weak global demand, “but that the manufacturing supply chain, including those of foreign companies and Chinese companies, has started to move out of China to countries in Southeast Asia and South America, leading to a collapse in export orders.”

China’s position as the world’s factory has begun to collapse, Li said. One of the most striking examples is the Chinese city of Kunshan, which used to be one of the busiest export hubs in the country. Now, many of the migrants who travel to Kunshan to find work are unable to find jobs.

“The main reasons for supply chain migration from China include the CCP’s increasing political and economic control over the whole society, increasing tensions between China and the United States, and rising geopolitical risks,” Li said. “As long as these factors do not change, the trend of supply chain migration will not be reversed. Even if Chinese companies go abroad to grab orders, the boost effect on exports will be limited.”

An employee works on the production line of Kent bicycles at Shanghai General Sports Co., Ltd., in Kunshan, Jiangsu Province, China, on Feb. 22, 2019. (Aly Song/Reuters)

China’s index of new export orders crossed the threshold of 50 percent into the expansion zone in February, but began to decline in March. According to the Purchasing Managers’ Index (PMI) released by China’s National Bureau of Statistics on March 31, the new export orders index of the manufacturing industry fell 2.0 percentage points from the previous month to 50.4 percent in March, while the index of new export orders for non-manufacturing industries dropped 3.8 percentage points from the previous month to 48.1 percent.

Moreover, while new customs data released in April showed a surprise surge in exports from a year earlier, analysts say the jump was more likely related to exporters rushing to fulfill a backlog of orders that had been disrupted by the pandemic in past months, and warned that global demand outlook remained subdued.

In a note, Capital Economics analysts stressed “the still gloomy outlook for foreign demand,” predicting that “the downturn in Chinese exports still has some way to run before it reaches a bottom later this year.”

United States: China Distorts and Disrupts Markets

State-sponsored trips by Chinese companies to drum up sales are just one way the CCP is trying to manipulate competition in the market, says a recent report from the office of U.S. trade representative Katherine Tai.

The 2023 National Trade Estimate Report on Foreign Trade Barriers (NTE report), released on March 31 by Tai’s office, pointed out that Beijing’s financial support for Chinese companies and simultaneous discrimination against foreign competitors continues to give Chinese companies an unfair advantage.

The report argues that Beijing provides massive financial support, regulatory, and other preferences to Chinese companies, while imposing formal and informal industry practices and policies that disadvantage foreign competitors.

China is “setting and pursuing production and market share targets that can only be achieved through non-market means,” the report says. Hence the government-funded trips, which seek to further a dual goal: to displace foreign competition domestically and then pursue dominance in global markets.

However, that strategy can “distort and disrupt markets,” the report continues, by creating “severe and persistent excess capacity.” It cites current situations in the steel, aluminum, and solar industries as examples.

The office of the U.S. trade representative “is determined to pursue all available domestic trade tools to protect the competitiveness of U.S. workers and businesses and will continue to work closely with like-minded trading partners on the shared challenges posed by China’s harmful industrial policies,” the NTE report said.

Reuters contributed to this report.