China faces a growing challenge as a glut of cheap goods threatens its economic stability. In the third quarter of 2024, more than 23% of China's publicly traded companies reported losses, rising from 20% in 2023 and less than 10% in 2019. This troubling trend, identified by Nikkei Asia using data from Wind Information, highlights the increasing struggles of Chinese companies amid oversupply and intense competition.
Chinese manufacturers are slashing prices to compete for market share as they struggle to find enough buyers for their products. The surplus of goods, including steel rebar, furniture, and solar panels, has led companies to reduce prices in a bid to stay afloat. As a result, the number of loss-making firms has surged since 2019, with the COVID-19 pandemic cited as a contributing factor.
The crisis extends across various industries, exacerbating financial difficulties for numerous companies. The oversupply is not limited to any single sector but spans multiple markets, amplifying the economic challenges for many businesses. The renewed tariff row with the United States further complicates the situation, posing potential obstacles for Chinese companies attempting to sell their products internationally.
The tariff dispute is expected to exacerbate the difficulties faced by Chinese firms, reducing their competitive edge in global markets. With tariffs making Chinese goods more expensive and less attractive to foreign buyers, the glut of products is likely to persist, worsening the financial outlook for many companies.