'China will export deflation and recession...': Nilesh Shah calls it a threat no country can dodge

As global trade braces for another tremor from Donald Trump's tariff offensive, a sharper warning has emerged from India. Kotak Mutual Fund MD Nilesh Shah took to X with a blunt assessment of China’s response to growing trade barriers: “China will export deflation and recession to the world.” 

He argues that the sheer scale of China’s manufacturing engine—backed by ruthless strategic intent—will force countries to recalibrate their own economic playbooks.

And the message isn’t sugar-coated. “Every Country will have to benchmark them to China and copy their ‘sam, dam, dand, bhed’ policy to be competitive,” Shah writes, evoking an ancient Indian strategy of persuasion, incentive, punishment, and deception.

China’s trade surplus for 2025 is poised to hit nearly a trillion dollars, positioning it as the single largest net exporter globally. For context, only two other economies—Germany and the US—are forecast to achieve exports exceeding a trillion dollars this year, and neither comes close to matching China’s surplus.

Amid Trump’s aggressive tariff push, cheap Chinese goods—redirected from the US—are now flooding emerging markets. Countries from Southeast Asia to Latin America are grappling with job losses, collapsing local industries, and surging trade imbalances. The deflationary ripple, according to Shah, is not just an economic anomaly—it’s a global threat.

“China will export deflation and recession to the world,” he warns, suggesting that the economic blowback from this export glut will be widespread and systemic. In Shah’s view, countries have no choice but to adapt—not just in terms of trade policy but through strategic maneuvering that mirrors China’s relentless focus on advantage.

“Every Country will have to benchmark them to China and copy their ‘sam, dam, dand, bhed’ policy to be competitive,” Shah reiterates.