China announced Monday that its trade surplus reached almost $1 trillion last year as its exports swamped the globe, while the country’s own businesses and households spent cautiously on imports.
When adjusted for inflation, China’s trade surplus last year far exceeded any in the world in the past century, even those of export powerhouses like Germany, Japan or the US. Chinese factories are dominating global manufacturing on a scale not experienced by any country since the US after World War II.
The outpouring of goods from Chinese factories has drawn criticism from an ever-lengthening list of China’s trade partners. Industrialised and developing countries alike have erected tariffs, attempting to slow the tide. In many instances, China has retaliated in kind, bringing the world closer to a trade war that could further destabilise the global economy. President-elect Trump, who will take office next week, has threatened to escalate already aggressive American trade policies aimed at China.
On Monday, China’s general administration of customs said that the country exported $3.6 trillion worth of goods and services last year, while importing $2.6 trillion. The resulting surplus of $990 billion broke its previous record, which was $838 billion in 2022. Exports in Dec, including some that may’ve been rushed to the US before Trump can take office, propelled China to a new single-month record surplus of $104.8 billion.
While China ran a deficit in oil and other natural resources, its trade surplus in manufactured goods represented 10% of China’s economy. By comparison, US reliance on trade surpluses in manufactured goods peaked at 6% of American output early in WWI, when factories in Europe had mostly stopped exporting and shifted to wartime production. Many countries seek trade surpluses in manufactured goods because factories create jobs and are important for national security. A trade surplus is the amount by which exports exceed imports. China’s exports of everything from cars to solar panels have been an economic bonanza for the country. Exports have created millions of jobs not just for factory workers, but also for high-earning engineers, designers and research scientists.
At the same time, China’s imports of factory goods have slowed sharply. It has pursued national self-reliance over the past two decades, most notably through its Made in China 2025 policy, for which Beijing pledged $300 billion to promote advanced manufacturing.
The backlash to China’s trade imbalance has come from industrialised and developing countries alike. Governments are worried about factory closings and job losses in manufacturing sectors that cannot compete with low prices from China. The EU and the US raised tariffs last year on cars from China. But some of the broadest barriers to China’s exports have been put up by less affluent countries with middle-income manufacturing sectors, like Brazil, Turkiye, India and Indonesia. They have been on the cusp of industrialisation but fear that could slip away.
The volume of China’s exports has been rising more than 12% a year. The dollar value of its exports has been growing at half that pace, as prices plunged because Chinese companies were producing even more goods than foreign buyers were ready to purchase. The question is whether China can maintain its lead if other countries raise tariffs. Yet many importers find that China remains the most competitive place to buy goods. Eric Poses, owner of All Things Equal, a US firm that invents and distributes board games and electronic tabletop games, uses suppliers in Shanghai. Printing board games costs twice as much in the US, while the US does not even manufacture many electronics needed for the tabletop games. “I wish I could do it here in a cost effective manner, but it’s just not possible.” NYT
