China's ability to reroute its trade flows and maintain its robust economic momentum despite trade tensions with the United States is drawing fresh attention from global policymakers.
Tariffs Have Failed To Dent China’s Exports
On Monday, in a post on X, International Monetary Fund First Deputy Managing Director Gita Gopinath said one of the most striking developments this year has been China's success in compensating for lost U.S. market share by expanding exports elsewhere.
During a year defined by escalating tensions with its biggest trading partner, which included tariffs imposed by President Donald Trump, that reached as high as 245% at certain points, the second-largest economy in the world is set to end the year on a high note.
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According to China’s General Administration of Customs, the country witnessed a 5.4% year-over-year surge in exports, at $3.4 trillion, and a $1.08 trillion trade surplus during the first 11 months of this year.
Gopinath said that despite the shifting trade landscape, “China’s growth at 5% this year seems unaffected by tariffs,” which she attributed to China’s success in offsetting American export demand with European and East Asian markets.
However, she signaled that this dynamic may not be entirely sustainable, concluding with a cautionary note saying, “hard to see this last.”
China’s Trade Surplus Touches Unprecedented Levels
Earlier this year, according to data from Bank of America's Global Investment Strategy, China’s trade surplus touched an unprecedented $1.2 trillion for the trailing 12 months in August.
The country's trade surplus has nearly doubled over the past five years, putting it well ahead of the record levels once reached by Germany and Japan at the height of their economic dominance in the last century.
Despite this, several experts believe that the country’s surpluses run a lot deeper, with investor Peter Thiel pointing to American imports from other countries that come with significant Chinese-made components or value-added contributions.
Economist Brad Setser has echoed similar views, accusing China of masking billions of dollars in unreported income, which, according to his predictions, is worth north of $500 billion.
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