A view of Lujiazui, Shanghai Photo: VCG

Editor's Note:

Currently, China's economy is steadily advancing along the path of high-quality development, even as domestic and international circumstances become increasingly complex. Some Western media, due to misunderstanding or bias, have repeatedly questioned or even distorted China's economic development. Accordingly, the Global Times launches the "Q&A on China's Economy" column to publish opinion pieces to present facts and clarify perceptions.


Recently, some foreign media have seized on China's July trade data, touting its "surging" exports and three consecutive months of surpluses above $100 billion as proof of a "China squeeze" or "China shock" for the rest of the world. The figures are real, but the conclusion drawn from them is not. In focusing on the headline numbers, they have overlooked the factors behind China's trade surplus.

China's three consecutive months of $100 billion-plus trade surplus is mainly attributable to a combination of rising export values and falling import costs. On the export side, the prices of China's goods have risen. Since last year, the prices of China's high-value exports have increased significantly. 

In the first half of this year, the export value of memory chips surged 113.2 percent year-on-year, while that of solar cells rose 19.6 percent. By weight, however, solar cell export volume fell 1.9 percent.

Therefore, a larger trade surplus in value does not necessarily mean higher export volumes year-on-year, let alone any "squeeze" or "dumping." The international market demand for these high-tech products remains strong, with some even in short supply. The so-called "export shock" is hardly justified. 

On the import side, falling prices for bulk commodities have lowered China's import bill. International oil prices, for instance, recently fell from a peak of $126 per barrel to below $80, while the landed cost of imported iron ore dropped by 30 to 70 yuan per ton. Prices for liquefied petroleum gas (LPG), chemicals and other commodities have also declined. In other words, the combination of higher prices for high-value exports and lower prices for imported commodities has widened China's trade surplus.

In reality, whether closer trade ties with China are a threat or an opportunity is best judged by those who feel its impact firsthand. Canada is a case in point. In July, Canadian employment "unexpectedly" jumped by 75,100, while the unemployment rate hit a two-year low. Analysts pointed to a sharp recovery in China-Canada trade as one contributing factor. From January to July, British Columbia's exports to China surged 29 percent to more than C$5.2 billion ($3.75 billion), helping drive the addition of 32,500 full-time positions in July alone, leading the country in manufacturing growth. By contrast, Ontario, whose auto industry is deeply tied to US-Canada supply chains, saw a sharp decline in full-time employment that month. The contrast shows in concrete terms how trade with China can support jobs and economic stability.

China's quality and affordable goods also help lower living costs for consumers worldwide. China's new energy products are accelerating the global green transition while reducing its costs; its AI and robotics are making intelligent technologies more accessible worldwide. Harvard economist Dani Rodrik wrote on August 10 that the world is no longer suffering from insufficient demand. Trade deficits represent a transfer of purchasing power from surplus countries, he argued, and as China pursues its own technological and commercial advantage, it has also delivered a major global public good. China's trade surplus, he suggested, might therefore be better understood as "enrich-thy-neighbor."

China has never deliberately pursued trade surplus. It has consistently sought more balanced import and export growth and worked toward a more open, balanced and mutually beneficial global trading system. In the first seven months of this year, China's exports grew 14 percent year-on-year, while imports rose 22 percent — an 8-percentage-point gap that reflects the country's efforts to promote more balanced trade.

China is not only the world's largest exporter, but also its second-largest importer, with a trade model characterized by enormous two-way flows. The country imports vast quantities of raw materials, components and intermediate goods from around the world, which are then assembled, processed and upgraded through China's manufacturing system. Some serve the domestic market, while others are exported to markets worldwide. By integrating production factors from different countries, China's industrial and supply chains help maximize their value, which not only supports China's economic growth, but also keeps global supply chains moving and allows countries around the world to share in the benefits of China's development.

No school of economic thought has ever equated a trade surplus with "taking advantage" and a trade deficit with "losing out." The expansion of China's surplus in goods trade is, to a large extent, a reflection of structural changes in its industrial structure. From the traditional "old trio" of garments, furniture and household appliances, to the "new trio" of photovoltaic products, electric vehicles and lithium batteries, and now to robotics, AI and innovative medicines, China's industries are steadily moving up the value chain, exporting an increasing number of high-value-added products around the globe. The growing share of high-value products means more countries can benefit from technological progress. If some Western countries are truly so concerned about the size of China's trade surplus, they could start by pushing their own countries to sell more high-value products such as lithography machines to China, rather than imposing export controls while simultaneously complaining that trade figures do not go their way.