China’s geo-economic tactics

A TRILLION-DOLLAR SURPLUS INDICATES THE SUPERPOWER'S GRIP ON THE WORLD'S TRADE REINS

- AMITENDU PALIT

CHINA'S $1 TRILLION trade surplus is not just a statistic. It is an affirmation of its ability to control global trade in a strategic fashion of its choice.

Notwithstanding the brushes it had with the US during 2025, the year ended on a high note for China. The trillion-dollar surplus coupled with renewed access to Nvidia’s H200 chips mark the end to a year that saw the US and China scaling new highs of tariffs. At one stage, Chinese exports to the US and US exports to China were grappling with prospects of facing nearly 150% effective tariffs. From there, the year is ending on a much sober note, with most Chinese exports to the US now facing effective tariffs below 50% and US exports to China being taxed at just above 30%. These tariffs are a result of the November truce between Presidents Donald Trump and Xi Jinping.

China’s trade surplus of $1 trillion was for up to November. The eventual full-year surplus will be larger. A simple learning from this huge surplus is that the rest of the world, like in the past several years, continues to buy much more from China than selling to it. The reorientation in global trade driven by US tariffs has not adversely affected China’s capacities in this regard, at least not yet. China continues to produce almost all of what the world needs and can sell it at competitive prices. This economic efficiency has prevailed in spite of the efforts to decouple and diversify from it. While most major economies have introduced industrial policies for increasing local production to reduce sourcing from China, the results are yet to be visible.