Fidelity Asian Values’ (FAS ) Nitin Bajaj believes the more pressure the US puts on China with tariffs on imports, the more Asia’s powerhouse will take market share globally, like it did during Donald Trump’s first term as president. 

‘China’s a cheap place to buy high technology goods. You would think China sells you socks and shirts and shoes. That’s not what China sells anymore,’ says the fund manager in a second excerpt from our virtual event last month.

‘They’ve gone from selling you socks to building you nuclear power plants,’ Bajaj adds.

You can watch the previous short video on ‘Incomparable China beats expensive India’ or catch up with the whole 45-minute ‘Big Broadcast’.

Can’t watch now? Read the transcript

Nitin Bajaj:

This is what happened under Trump’s first presidency. He came up with all the tariffs and what happened to China’s share of global trade? It went up. America put up all the tariffs, what happened to China’s exports to the US? Not much change.

Why is that? People, people, people. Chinese engineers, they keep coming up with new products and they keep taking market share globally. When Trump came up with his first policy, I think the reaction of Chinese companies was, they started looking for new markets. They probably would have looked for them anyway, but I think there was more urgency to look for newer markets outside of the US.

For example, China’s share of the truck market in Africa has gone from almost nothing to 70%, 80% today. China’s gone from a nobody in car exports to the number one car exporter in the world. This was not an accident. The more pressure you put on China as America, the more they’re going to go and take market share from other companies globally.

Why did the Chinese companies take 70%, 80% market share in Africa for trucks? A Chinese company can sell a new truck in Africa 30% cheaper than a second-hand European truck. Why wouldn’t an African guy buy a new truck which is cheaper?

Gavin Lumsden:

So, economics is trumping the politics.

Nitin Bajaj:

Yes. Same with polysilicon. Polysilicon is the base material that you need to make solar cells. China has more than 95% share of polysilicon today. Why? Chinese can make one kilogram of polysilicon at $5. Americans and Germans make it at $13. How are you going to compete?

Why are Chinese able to do this? They’re able to do this because of their engineering talent. I don’t think China’s a low-cost country anymore, in terms of cheap labour. You can find cheaper labour in Indonesia, India, Vietnam. China’s a cheap place to buy high technology goods. You would think China sells you socks and shirts and shoes. That’s not what China sells anymore. Saudi Arabia’s building a nuclear power plant. The French are not building it. The Americans are not building it. The Chinese are building it. They’ve gone from selling you socks to building you nuclear power plants.