The unprecedented level of China’s trade surplus has alarmed international economists and policymakers. According to the General Administration of Customs, China had the most significant monthly trade surplus ever in June 2024, totaling $97.4 billion. Comparing this to last year’s period, which brought in $75.1 billion, shows a considerable gain.
The spike in the trade surplus is due to a fall in imports and strong exports. Due to a robust electronics, equipment, and textiles market, China’s exports increased by 12.5% annually to $281.8 billion. Conversely, imports decreased by 6.7% to $184.4 billion due to lower pricing for commodities like iron ore and less domestic consumption.
“China’s trade surplus presents a dual benefit,” Zhongtai Securities Chief Economist Li Xunlei stated. “While it reflects the country’s export competitiveness, it also points to weakening domestic demand and potential economic imbalances.”
Amid concerns abroad, especially in the U.S. and Europe, is China’s record trade surplus. Opponents contend that China’s enormous surplus would worsen international relations issues and global economic imbalances. The United States has long accused China of using currency manipulation and state-owned firm subsidies to retain an unfair trade edge.
U.S. Trade Representative Katherine Tai stated, “China’s trade practices are harming American workers and businesses and undermining fair competition.” “We must address these issues to ensure a level playing field.”
European authorities have expressed similar comments, urging China to lower its trade surplus and increase imports. European Commissioner for Trade Valdis Dombrovskis stated, “We call on China to open its markets further and address structural issues that contribute to the trade imbalance.”
The expanding trade surplus is causing China’s economic planners additional hurdles. Although the surplus strengthens the yuan and increases foreign exchange reserves, it may also raise demand for currency appreciation, which would raise the cost of Chinese exports overseas. A protracted excess could also exacerbate domestic inflationary pressures.
Experts advise China to concentrate on increasing local demand and lowering its reliance on exports to lessen these risks. “China must rebalance its economy by encouraging investment and consumption in high-value sectors,” Fudan University’s Zhang Jun, dean of the School of Economics, stated.
China’s next movements will be closely observed by the international community as it negotiates these complex dynamics. The world economy is interdependent, and addressing trade imbalances and promoting sustainable growth requires concerted efforts, as demonstrated by the record trade surplus.
