China hit by record number of WTO trade disputes as global backlash to export surge grows

“If China’s economy can become more balanced for her own interests, it may also improve relations with other countries,” Lu said.

But the imbalance is not just a domestic challenge. Analysts say that China’s overcapacity — particularly in sectors like steel, autos, chemicals and consumer goods — is spilling over into global markets, straining trade relations and inviting retaliatory action.

Trump’s tariffs push Chinese goods into alternative markets

Trade tensions have been further heightened by US President Donald Trump’s trade policy. Since taking office in January, Trump has imposed a 20 percent tariff on all Chinese imports and is expected to announce reciprocal tariffs on other US trading partners by April 2. In response, China has slapped retaliatory duties on $36 billion worth of American exports, including agricultural products, vehicles, and energy supplies.

François Chimits, economist at the Mercator Institute for China Studies, said US and Japanese trade barriers have shifted the burden of China’s excess output onto other markets. “The more barriers the US and Japan put up, the more the EU has to digest of Chinese excess production,” he said.

The European Commission launched 21 trade investigations into Chinese goods in 2024 — up from nine the previous year — targeting a wide range of products including plywood, candles, steel cylinders and decorative paper.

Developing countries drive surge in WTO complaints

More than half of last year’s WTO trade cases against China came not from the West, but from emerging economies. In total, 117 disputes were filed by developing nations, including 37 by India, 19 by Brazil, and nine by Turkey. The breadth of complaints underscores how China’s export-driven strategy is under growing pressure not only from wealthy countries, but also from its supposed economic allies.

China’s export dominance has even begun to upset close strategic partners. Russia, still facing Western sanctions, recently imposed “recycling fees” to slow a surge in Chinese car imports that now make up nearly two-thirds of its auto market. Meanwhile, Pakistan — a major recipient of Chinese infrastructure aid — filed five trade cases last year over rising imports of printing paper, tape, and chemicals.

Still, Pakistan’s finance minister Muhammad Aurangzeb played down the disputes, telling the Financial Times that “our relationship goes well beyond trade” and that China continues to support special economic zones aimed at boosting Pakistan’s exports. However, many Chinese-backed megaprojects in the country have faced cost overruns and lengthy delays.

Structural imbalances prompt internal calls for reform

Experts say that much of China’s trade friction stems from a deeper imbalance in its growth model — one that still prioritises production and investment over domestic consumption. Chinese leader Xi Jinping has made industrial upgrading a centerpiece of his economic agenda, particularly in high-tech sectors, but this has only sharpened concerns among trade partners about sustained global overcapacity.

“When you’re as big as China, you have to care what your imbalances mean for the rest of the world,” Chimits said.

Former officials inside China are increasingly echoing those concerns. Peng Sen, a former top planner at the National Development and Reform Commission, said at a recent forum in Hainan that consumption has long been sidelined in Chinese policy thinking.

“For a long time, we have prioritised production over living and emphasised investment over consumption,” Peng said. “Our traditional policies and systems have not been very friendly to consumption, resulting in a state of suppressed consumption.”