China’s Relentless Export Drive

For decades, global trade functioned on the reassuring assumption that nations specialized, exchanged, and prospered together. The US built its economic dominance on the back of manufacturing strength in the post-war years, leveraging its strong industrial base and the reconstruction and industrialization effort in Europe. After its 1978 reforms, China emerged as the “workshop of the world.”

The general pattern in a developing country’s trade history has been that as the country gets wealthier and more educated, manufacturing shifts away from low-value production towards higher-value-added industries, and household consumption increases, partially rebalancing the trade surplus.

China’s strategy is so radically different that its role cannot be limited to that of a central player in trade. It is becoming a systemic disruptor, determined to export everything and uninterested in imports, with consequences that reverberate far beyond bilateral deficits.

China is on track to achieve a current account surplus of 1% of global GDP by 2029, the highest ever recorded by a single economy, far exceeding the surplus accumulated by the USA in the 1940s. These numbers are evidence of a long-running and intensifying trade imbalance that reflects a deliberate, strategic choice by Beijing.

The result is a global trading system skewed toward a China that is more interested in selling than in trading.

China is increasingly involved in high-value exports but does not seem interested in shedding low-value-added categories to minimize its reliance on foreign goods. The country’s approach stands in contrast to the historical US trajectory—one in which rising incomes and industrial shifts gradually increased imports and reduced surpluses. As Chang Shu of Bloomberg Economics observes, China’s industrial trajectory is diverging “from the classic model”. Instead of progressing away from basic manufacturing, China is holding on to its dominance in low-value-added sectors while expanding in higher-value-added industries such as electric cars, IT products, and advanced machinery, and increasingly treating trade as an instrument of geopolitical leverage.

According to many analysts, this dual dominance is strategic; it allows China to capture global markets at every value level, preventing emerging economies from following the classic development ladder. It also helps maintain pricing power and export deflation through excess production capacity, thus “importing growth” by undercutting other countries’ products.

While US imports rose 27% between 2021 and 2025, Chinese imports fell relative to 2021 levels, even as Chinese exports climbed dramatically. The trade surplus reached $964.8 billion by 2025, dwarfing historical precedents.

The reasons are clear: even as wages rise, automation allows China to retain competitiveness, while its advances in more advanced industries make imports of industrial machinery less and less necessary.

China’s grip on low-value exports deprives Global South economies of the first rung of the development ladder. Meanwhile, its dominance in high-technology sectors puts immense pressure on advanced economies.

Speaking hyperbolically, China aims to avoid importing any products from the rest of the world. China still purchases foreign semiconductors, aircraft, and some manufacturing equipment—but only as a student buys textbooks. In this hostile international environment, China’s goal is to ensure that no sector vital to national strength relies on foreign suppliers. This is partly fueled by geopolitical anxiety and partly driven by ambition: imports are vulnerabilities; exports create power. In some ways, this echoes President Trump’s concern about the US economy’s overreliance on imports and his push to bring strategic (and less strategic) industries back home. 

At the global level, China’s strategy fosters an unbalanced equilibrium with significant geopolitical consequences. The enormous trade surplus of the USA in the late 1940s—rebuilding a war-torn world—allowed it to finance reconstruction in Europe and Asia and shape the postwar order, linking this trade surplus with a geopolitical leadership. Where the US surpluses financed global demand, China’s surpluses are accumulated as foreign exchange reserves and invested in strategic overseas investments.

The geopolitical implications are severe. Export surges depress prices globally, undermining manufacturers in Europe, the US, South Korea, and Japan. On the other end of the development spectrum, countries once able to compete in low-value exports are displaced by China’s low prices, sustained through currency management (made possible by foreign exchange reserves), subsidies, and robotic automation.

All of this leaves Europe in a difficult position, cornered and forced to choose between dramatically increasing competitiveness (for example, through draconian tax and welfare cuts) or embracing protectionism (potentially imposing higher prices on its citizens). Between this rock and a hard place, the most likely outcome is protectionism spreading from the US to the EU, possibly triggering further tensions and trade retaliation.

The historical model that allowed the US to reshape the postwar world through mutually reinforcing trade relations no longer fits with China’s emerging strategy of complete self-sufficiency and global export dominance. The impact is not just economic but also geopolitical: the era of shared growth via trade may be ending, giving way to a world of strategic rivalry, protectionist barriers, and competing industrial blocs, with the USA and China at the forefront of this cultural and geopolitical shift.