By John Q. Hosedrinker 
China has achieved a record-breaking trade surplus, reaching US$1.076 trillion in the first eleven months of the year, exceeding the previous record. This growth was fueled by efforts to diversify export markets despite ongoing trade uncertainties. November saw a rebound in exports, increasing by 5.9% year-on-year to US$330.35 billion, contributing to an overall trade surplus for the month. While exports showed strength, sluggish import growth reflected weaker domestic demand, a key challenge for China’s economy.
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China’s trade surplus tops record US$1 trillion, defying trade war uncertainty. This is a monumental figure, a financial achievement that speaks volumes about China’s economic prowess in the face of significant global headwinds. It’s a number that deserves careful consideration, especially given the backdrop of the trade war initiated by the Trump administration, designed to curb China’s economic rise. But the fact that China managed to not only weather that storm but also achieve a record surplus raises some fascinating questions.
This massive surplus isn’t necessarily a sign of pure strength. Some economists suggest that it’s actually a symptom of a deeper issue within the Chinese economy. Because domestic consumption within China is relatively weak—with wages representing a low percentage of the country’s overall GDP—China is, in effect, compelled to export its excess production to the rest of the world. This is essentially exporting deflation, potentially destabilizing other nations’ economies. This creates a difficult situation for the rest of the world, which finds it increasingly difficult to compete and maintain their own industries.
The dynamic is straightforward: China produces goods at a low cost, thanks to factors like abundant natural resources, a massive labor pool, and potentially lower wages. This allows them to gain market share while other countries struggle to keep pace. The US, in particular, has seen the downsides of this.
The tariffs imposed during the trade war did not have a meaningful impact on US manufacturing or significantly improve the US trade deficit with China. Instead, it seems that American consumers bore the brunt of those tariffs. Trump’s approach to trade was seen as a miscalculation, a failed attempt to isolate China while simultaneously alienating many of its trading partners.
Looking ahead, it’s worth considering the long-term implications of this dynamic. The constant flow of goods from China to the rest of the world, in exchange for dollars, creates an imbalance. China accumulates vast reserves of foreign currency, which can then be invested. At the same time, this strategy is not sustainable.
China’s trade surplus demonstrates that China has a clear vision for its economic goals, one that is largely unaffected by external pressure. The EU, on the other hand, should consider their stance. Do they want a bi-polar world or a tri-polar world?
The Chinese people’s culture of frugality and saving has a direct impact on the trade surplus, as they are less prone to spend domestically, resulting in higher export volumes at lower prices. This surplus capital allows them to invest in assets abroad, furthering their global economic influence.
The reaction to China’s success often differs significantly from how a Western nation’s success might be perceived, revealing some undercurrents of bias. China is also investing heavily in renewable energy and nuclear power.
In conclusion, China’s record trade surplus of over US$1 trillion is a complex phenomenon. It reflects both the nation’s economic strength and some of its structural challenges. It’s a testament to China’s ability to navigate global trade and achieve its economic goals, despite the challenges it faces. This trend is likely to continue.