Obsession with China's trade surplus: A self-contradicting narrative

Editor's note: Xin Ping is a Beijing-based international affairs commentator. The article reflects the author's opinions and not necessarily the views of CGTN.

Once again, China's trade data have become the subject of a biased debate. Certain Western media outlets contend that China's economic ascent comes "at the expense of the rest of the world." This narrative, however, is built on a selective reading of China's trade figures and a misunderstanding of how China has achieved its industrial strength. At its core lies an outdated belief that only Western economies are entitled to dominate global value chains.

China's manufacturing strength stems from a complete and efficient industrial system, a rapidly maturing innovation mechanism and a highly competitive domestic market. Its progress toward higher-quality development, which is a natural right of all nations, is the result of the country's persistent hard efforts.

China's journey from producing wigs and toys in the 1980s to becoming indispensable in global supply chains for electronics, medical devices and advanced consumer goods reflects its decades of investment in research, infrastructure and human capital. Chinese companies are now leading the world in sectors such as solar panels, electric vehicles, and critical electronic components – achievements forged through long-term planning and unwavering execution.

The argument that China's export strength harms other economies overlooks a basic fact: Chinese goods help to bring down inflation and raise living standards worldwide. Research by economists Xavier Jaravel and Erick Sager shows that a 1.0 percent increase in U.S. imports from China leads to a 1.9 percent drop in American consumer prices.

Affordable Chinese smartphones have accelerated digital inclusion in Africa, enabling mobile banking, online education and the growth of small businesses. These are contributions Western firms failed to deliver at scale. China's export growth has played a stabilizing role in a world grappling with persistent inflation and widening digital divides.

China's record-high trade surplus reflects the rising value-added of its exports and broader structural shifts in the global industrial landscape. Much of the criticism directed at China's trade surplus is rooted in a deep-seated misconception: Only Western companies have the right to occupy the top end of global value chains, while the developing world should remain dependent suppliers of raw materials and low-end goods.

That mindset is a relic of the past. Western discomfort arises not from China's "unfair practices," but from the reality that China's industrial ascent directly challenges America's re-industrialization agenda and Europe's efforts to revive manufacturing sectors hollowed out by decades of offshoring.

But economic upgrading is not the exclusive privilege of wealthy nations. If the U.S. and Europe can pursue industrial renewal through expansive subsidy programs, why should developing economies be faulted for doing the same through innovation and enhanced productivity?

Focusing solely on China's surplus in goods trade paints a misleading picture. The U.S. and Europe both maintain substantial surpluses in services trade. In 2024, the U.S. recorded a services trade surplus of over $27 billion with China, while the E.U. recorded a surplus of over $50 billion.

Moreover, China's exports are not purely "Chinese." Foreign-invested enterprises in China account for one-third of the country's total trade and about half of its exports in machinery, electronics and high-tech products. Nearly 40 percent of European companies' exports from China are shipped back to Europe.

Global trade is deeply intertwined. Portraying China's surplus as a unilateral gain oversimplifies the reality of modern, multinational production networks.

In the name of national security, Western policymakers are increasingly resorting to tariffs, export controls and industrial restrictions as instruments of competition. Yet history shows that protectionism ultimately weakens, not strengthens, long-term competitiveness. No country has ever tariffed its way to technological leadership.

The Smoot–Hawley Tariff Act deepened the Great Depression. U.S. tariffs have raised the costs for American consumers and businesses. And studies by the IMF and the Peterson Institute show that protectionism depresses productivity and slows innovation.

China's trade surplus is not the product of coercion or manipulation. It is the outcome of industrial completeness, relentless innovation and an economy of scale. Its exports help curb global inflation, broaden access to technology and are deeply woven into multinational supply chains. A candid dialogue must recognize that competitiveness, not protectionism, is the path to shared prosperity. The future of the global economy will be shaped not by tariffs, but by innovation, adaptation and collaboration.

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