In 2025, China’s trade surplus hit a record high of nearly $1.2 trillion, fueled by a 5.5% increase in exports, totaling $3.77 trillion, and flat imports. Despite a 20% drop in exports to the U.S. due to tariffs, China’s manufacturers expanded into other global markets, especially Africa, Southeast Asia, and Europe. Strong demand for items like computer chips and cars, with auto exports surging 21%, bolstered these exports. Economists anticipate exports will continue to drive growth in 2026, though internal factors like decreased domestic demand may slow future growth.
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Xi Warns Officials Against Chasing ‘Reckless’ Expansion in GDP is a fascinating turn of events, especially considering the context of China’s economic trajectory. It’s almost as if the very person who likely set those GDP targets is now signaling a shift in priorities. The implication is clear: the relentless pursuit of growth at all costs might be causing more harm than good. It’s a move that suggests a focus on quality over sheer quantity, a sentiment that resonates with the idea of long-term sustainable development rather than short-term gains. The warning also seems to implicitly acknowledge that perhaps some of the reported GDP figures might be, shall we say, a bit embellished.… Continue reading
Despite a significant 21% year-on-year decline in exports to the U.S. due to new tariffs, China’s overall exports surged 8.1% in April, exceeding expectations. This increase was driven by a substantial 20.8% rise in shipments to Southeast Asia, particularly Indonesia and Thailand. However, the overall export growth may partially reflect pre-tariff contracts and transshipment, with future weakening anticipated. Imports from the U.S. also fell sharply, by almost 14%.
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Despite significant US tariffs on Chinese goods, including toys, Chinese businesses in Yiwu, a major export hub, report a decreased reliance on the American market. Exporters are actively diversifying, finding new customers in South America and the Middle East, confident in their ability to find alternative markets. This shift reflects a broader defiance towards US trade policies, evidenced by both business practices and state media commentary. While US businesses face potential supply chain disruptions and price increases, China’s economic growth, although impacted by the trade war, is expected to continue.
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China’s April manufacturing PMI plummeted to 49.0, its lowest point since May 2023, signaling a contraction driven by escalating trade tensions with the U.S. Sub-indexes for production and new orders also fell sharply, reflecting weakened demand. This downturn follows March’s unexpectedly strong growth, attributed to preemptive exports. The government acknowledges the impact of external factors and plans to coordinate domestic policies with trade dispute responses.
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Facing persistent economic challenges stemming from a housing crisis, youth unemployment, and the impact of US tariffs, China’s politburo announced a multi-pronged strategy. This plan includes bolstering domestic demand through fiscal stimulus, increasing social welfare benefits, and promoting service industry development. Simultaneously, reports suggest China may be considering tariff exemptions on certain US products, including semiconductors, potentially signaling a de-escalation of trade tensions, although both governments offer conflicting accounts of ongoing negotiations. This proactive approach reflects Beijing’s strategy to withstand external economic pressures while prioritizing domestic stability.
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Despite escalating trade tensions with the U.S., China’s first-quarter 2025 GDP grew by 5.4 percent, exceeding analyst predictions of 5.1 percent. This growth, attributed to the resilience of the Chinese economy, occurred before the latest round of increased U.S. tariffs. However, government officials acknowledge that the high U.S. tariffs, violating WTO regulations, will create economic pressure. While China has diversified trade partnerships and employed strategies to mitigate tariff impacts, experts warn of ongoing challenges such as weak domestic consumption.
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Despite President Trump’s new tariffs and threats of further increases, particularly on electronics and pharmaceuticals, global stock markets rose, indicating a possible retreat from the most severe measures. China downplayed the impact on its exports, citing diversification efforts and a strong domestic market as mitigating factors. While the US administration initially offered exemptions for some electronics, these were later retracted, leaving companies uncertain about future trade policy. The trade war continues, impacting consumers through price increases as seen with Sony’s PlayStation 5, and prompting international condemnation of protectionist trade practices.
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Victor Gao, a former translator for Deng Xiaoping, refutes the notion that the US has successfully isolated China, arguing that the US’s trade war has harmed its own citizens and disregarded global sovereignty. He asserts China’s readiness to withstand this pressure, highlighting China’s long history and vast market, dismissing the significance of losing the US market. Gao emphasizes ongoing dialogue between China and the EU, suggesting potential alternative trade partnerships. He concludes that US-China relations will not improve without a shift in the US’s attitude toward China and a cessation of its antagonistic approach.
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Amidst escalating trade tensions, Chinese President Xi Jinping declared China’s unwavering stance against what it terms “unilateral bullying” by the US, rejecting accusations of starting a trade war. China raised tariffs on US goods to 125%, but asserted this was a response to US actions and not a sign of further escalation. Xi engaged in diplomatic efforts with Spain and other nations, aiming to solidify alliances and present China as a reliable trading partner amidst global economic uncertainty. While China maintains it will not initiate further tariff increases, it has several alternative countermeasures available.
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John Q. Hosedrinker 
Matt Underwood