China’s Trade Surplus Tops $1 Trillion for the First Time
President
Trump’s tariffs weren’t enough to hold back the global export flood by China,
which pushed past last year’s record in just 11 months.
News Analysis Tone
·
Despite Tariffs, China’s Trade Surplus Breaks $1 Trillion
Barrier
·
Tariffs Fail to Slow China’s Export Surge as Trade Surplus
Hits Record $1.08 Trillion
Economic / Policy Focus
·
Record $1 Trillion Trade Surplus Puts China at Center of Global Trade Tensions
·
Weak Renminbi and Expanding Exports Push China’s Trade
Surplus to Historic Levels
Impact-Driven
·
China’s Export Wave Reshapes Global Manufacturing as Trade
Surplus Exceeds $1 Trillion
·
Record Surplus Underscores China’s Growing Dominance in
Global Trade
China got the world’s attention last January when it announced
that its trade surplus for goods and services had hit almost $1 trillion, an excess
of exports to imports that no country had ever reached.
Now China has surged through that milestone in just 11 months
this year. China’s customs agency announced on Monday that the country’s accumulated
trade surplus reached $1.08 trillion through November.
Tariffs imposed by President Trump on China have caused Chinese
exports to the United States to drop by nearly a fifth. But China has throttled
back its purchases of American soybeans and other products by almost the same rate,
continuing to sell three times as much to the United States as it buys.
China’s $111.68 billion trade surplus in November was its third-largest
ever in a single month. The overall surplus through the first 11 months of the year
is up 21.7 percent from the same period last year.
China has ramped up considerably its sales to other countries.
From cars to solar panels to consumer electronics, a tsunami of Chinese exports
is flooding Southeast Asia, Africa, Europe and Latin America. Carmakers and other
exporters in traditional manufacturing powerhouses like Germany, Japan and South
Korea are losing customers to Chinese rivals. Factories in developing countries
like Indonesia and South Africa have had to curtail production or even close as
they struggle to match China’s low prices.
Chinese companies have shifted final assembly of their goods
to Southeast Asia, Mexico and Africa, which then ship finished products to the United
States. This has allowed them to partly bypass Mr. Trump’s tariffs on goods coming
straight from China.
China now sells more than twice as much to the European Union
as it buys. China’s trade surplus with the region has widened considerably this
year.
One major reason is that China’s currency has been weak over
the last several years against many other currencies, particularly the euro. Another
is that prices have been falling in China, while they have been rising in the United
States and Europe.
The weakness of the Chinese currency, the renminbi, has helped
propel its exports. More than a tenth of the Chinese economy now consists of its
trade surplus in manufactured goods. Europe has felt the sting sharply.
“With the renminbi undervalued by 30 percent against the euro,
possibly more, it will be exceedingly difficult, if not impossible, to compete against
Chinese manufacturers even if Europe does all the right things it needs to do in
terms of deregulation, bringing down energy prices and establishing a true unified
market,” said Jens Eskelund, the president of the European Union Chamber of Commerce
in China.
China’s trade surplus in factory goods is even bigger as a share
of its economy than the United States ran in the years immediately after World War
II, when most other manufacturing nations were in ruins; or during the early years
of World War I, when the United States was at peace and churning out civilian goods
while Europe was embroiled in war.
Top leaders of the International Monetary Fund, which monitors
economies with the aim of preventing crises, are making their annual visit to China
this week to review its currency and financial policies and are expected to announce
a preliminary summary of their findings on Wednesday.
A growing number of economists and business leaders, including
former senior officials at China’s own central bank, are calling on Beijing to let
the renminbi increase in value against the dollar and other currencies.
For China, a stronger renminbi would make goods like gasoline,
French wines or Japanese cosmetics cheaper to import. Savings on such purchases
would leave China’s households with more money to spend on Chinese goods and services,
like restaurant meals, concert tickets and electric cars.
Reviving consumer spending in China is one of the top goals
of Beijing leaders. But doing so by allowing the renminbi to strengthen would also
carry costs for China.
A stronger renminbi would hurt China’s exporters. The dollars
they earn by selling goods in foreign markets would yield fewer renminbi for them
to pay workers and other expenses. Factories create millions of jobs in China, and
a stronger renminbi could slow the rate at which other countries transfer manufacturing
to China.
China’s export success has also financed a boom in technological
innovation and has given Beijing the resources to help other authoritarian countries
when they encounter difficulties, notably Russia, North Korea and Iran.
China is trying to preserve its trade surplus by pressing other
countries not to erect trade barriers. “Protectionism cannot solve the problems
caused by global industrial restructuring, but will only worsen the international
environment for trade,” Xi Jinping, China’s top leader, said on Thursday, according
to a Chinese government summary of his meeting with President Emmanuel Macron of
France.
Some Chinese economists nonetheless say that China must someday
accept a narrower trade surplus to help its long-suffering consumers.
“For China to expand domestic demand, it is necessary to minimize
the trade surplus, and in the future it may even need to
consider maintaining a trade deficit,” Zhang Jun, dean of the School of Economics
at Fudan University in Shanghai, said in a speech last month.