40-plus "cleaning" Chinese goods: The White House has launched a global trans-shipment network, and Xi's export haven is being blocked.

A Chinese-made commodity, coming out of a Chinese factory, is not going to the United States.

It may enter the industrial zone in South-East Asia, where it will be loaded with the last few parts; Possible entry into a tax-insured warehouse in the Middle East or Europe, with a new package and a new set of documents; It may also be possible to re-issue the tickets by third-country companies and eventually enter the United States with another country ' s origin label.

The boxes changed, customs clearance changed, and the chain of production of them did not change.

On 13 August, the White House released the report " The Big Transshipment Swindle: Rise, Size and Cost ", which openly placed the chain that had long hidden behind global trade data on the table. It was reported that since the introduction of 301 tariffs on Chinese commodities in the United States in 2018, Chinese exporters have increasingly used third-country trans-shipment, limited processing, repackaging and conversion of origin, and that networks have reached more than 40 countries and regions. The median estimates used by the White House show that commodities involved in illicit trans-shipments are about $75 billion per year, resulting in an estimated 450,000 job losses in the United States and $19 billion to $26 billion in federal tax losses.

The report is not the White House that has once again criticized China ' s trade policy.

What is really worth asking is what happened to China’s trade with the US under high tariff pressure, and how much of the so-called industrial chain resilience that Xi’s government has been emphasizing over the years, is actually based on this buffer zone in third countries.

The United States is not only speculative about this approach.

In 2023, the United States Department of Commerce completed an anti-circumvention investigation of Chinese solar energy products, which concluded that some Chinese enterprises sent their products to Cambodia, Malaysia, Thailand and Viet Nam for limited processing and re-export to the United States to avoid anti-dumping and countervailing duties on Chinese photovoltaic products. Of the eight companies surveyed, five were found to have circumvented.

The United States Customs Service has also detected cases of Chinese aluminium plates being trans-shipped through Turkey, Chinese wooden cabinets suspected of trans-shipment through Viet Nam and Chinese glycerine being trans-shipped through Cambodia. In the Glycerine case, United States customs officers even visited Cambodia's so-called production facilities to investigate the site and found that the plant's equipment, personnel and physical capacity did not support the declared export scale at all, while the so-called local product was in fact simply further processing the original Chinese glycerine.

This is the worst place to see "transit".

The normal global division of labour would certainly extend across many countries, and it would not be illegal for Chinese firms to invest in real construction in Vietnam, Mexico, or Europe. The problem is that when third-country factories undertake only very limited processing, when the equipment, personnel and capacity of the enterprise are clearly not commensurate with the size of the export, and when a Chinese-made commodity is repackaged or assembled in a simple fashion, it suddenly acquires the identity of another country, so-called “globalized production” can become a tool for avoiding tariffs.

In the past, the game was made possible by the fact that United States Customs was faced with large-volume imports.

A certificate of origin, a commercial invoice, a logistics route that has already bypassed several countries has been costly to conduct. Even if customs suspects that there are problems, it is necessary to establish evidence of individual enterprises, batches of goods.

The White House is now trying to change the situation.

The report revealed that the United States was using artificial intelligence technology known as “Defective Border” to find anomalies through global trade data. The system can be compared to declared origin, transport routes, components and normal trade patterns, and may be the subject of further investigation once a country suddenly exports large quantities of goods from its own country that do not have the capacity to produce the same, or when the amount of Chinese imports of a commodity is abnormally correlated with that of exports to the United States.

This means that the United States Customs is passing through the label outside the container.

“Made in Vietnam” “Made in Malaysia” and even the source signs of other countries may be the starting point for the investigation in the future. The real question for the United States is: Where are the core parts manufactured? How many local processings have been completed? Does the plant have equipment and personnel commensurate with the declared quantity? Is it the commodity itself that eventually changed, or is it just customs documents?

This pressure on Beijing is much more complex than a single increase of a few percentage points in tariffs.

After the first-term Trump war on trade against China, Beijing did not stop expanding its manufacturing industry. Instead, Chinese enterprises have begun to be more active in assigning production chains to South-East Asia, Mexico and other third-party economies. There are both normal industrial internationalization and the real incentives to circumvent United States trade barriers. The decline in direct United States imports from China does not mean that Chinese manufacturing has disappeared in equal proportion from the United States supply chain. The White House report addresses the gap between this “statistical decoupling” and “continuing in the sense of the industrial chain”.

For Xi, this change was first to strike at the buffer space of export policies.

China ' s economy has long faced problems of inadequate domestic demand, real estate adjustment and local fiscal pressures, and manufacturing and exports have thus assumed a very important and steady growth role. Once the United States not only taxes goods directly issued in Chinese ports, but also starts to track the final movement of Chinese spare parts through third countries, Chinese enterprises will inevitably increase their costs by simply changing their export path to absorb tariff pressures.

More troublesome is the fact that the United States is gradually embedding counter-transit requirements in its trade relations with other countries.

This means that Washington is targeting not only Chinese enterprises, but also those of third countries that are willing to facilitate transit to Chinese goods. The former United States tariff policy has made it clear that additional duties and penalties may be imposed on goods that customs determines to evade the application of tariffs by trans-shipment; The policy also requires regular disclosure of the country and specific facilities used to circumvent the plan, which provides the basis for government procurement, national security reviews and due diligence by enterprises.

Once such a system continues to be in place, Beijing will no longer face only one United States customs clearance.

Third-country Governments, in order to preserve their treatment of United States trade, will have an increasing incentive to review unusual investments, declarations of origin and surge exports from China. Those that could have been transit points for Chinese goods to avoid United States tariffs could have become future United States trade enforcement checkpoints.

This is also where Xi Jinping's regime is truly inescapable.

Beijing has consistently claimed over the years that China has “the world's most complete industrial chain” and has used its vast manufacturing capacity as proof of its institutional superiority. But when domestic consumption does not absorb these capacities fully and large numbers of commodities have to rely on international markets for their exports, this manufacturing advantage creates another dimension: it is increasingly dependent on external markets for continued overcapacity in China.

What the United States is doing today is trying to prevent China from hiding such dependence from third-country status.

The Chinese Embassy in the United States continues to use familiar language in the face of the report, emphasizing that “no winner of the trade war” is opposed to the use of national power against Chinese enterprises and demanding that the measures on trans-shipment should not harm third parties.

These responses bypassed the most needed questions.

If Chinese enterprises have made real investments abroad and have completed substantial production sufficient to form new origin, the United States will certainly have to judge on a case-by-case basis under trade law; But if only China’s goods are shipped to another country, processed, repackaged and even replaced with documents, and then entered the United States as another country’s commodity, the problem is not “trade protectionism” in Beijing, but rather a very specific issue of customs declarations and tariff enforcement.

The White House this time even named its report "The Big Transshipment Fake" and used the image of the Trojan Horse on its cover, a political expression that was already clear: the Trump government believes that China is re-entering the United States with the shell of a third country.

It is precisely how long this shell will last for the future that truly affects Xi.

If the United States eventually could use artificial intelligence, customs data, trade agreements and third-country cooperation to move the origin review from “where goods come from” to “where the goods are actually produced”, the means of spreading the US tariff shock through global supply chains in Beijing over the past few years would be significantly reduced.

Of course, Chinese enterprises can still invest in construction abroad. But a true move of production means that capital, technology, employment and part of the industrial chain leave China together, which is completely different from simply changing a label for Chinese goods.

This is precisely a contradiction that leaves Xi with the problem: without a real move of production, it is increasingly difficult for Chinese goods to bypass United States trade barriers by third countries; The real transfer of production will also accelerate the transfer of capital, orders and manufacturing links abroad.

The United States is not just a tax escape route because of this.

It is forcing Beijing to pay increasing costs for the economic model that used to be based on large exports, excess capacity and global transit to buffer United States pressure.

In the past, Chinese goods were subject to port, packaging, documents and labels of origin.

Now the United States is asking who made it under the label.

When this trade war entered this stage, what really is disappearing for Xi is probably the very layer that once made “China” the coat that would shield US tariffs.