China’s Premier Li Qiang has urged trading partners to resist rising protectionism, following the release of data showing China’s record $1 trillion trade surplus. The surplus was largely driven by increased exports to markets outside the United States. Li’s remarks come amid growing tensions between China and major trading partners, who are pressing China to reform its $19 trillion economy and reduce its reliance on exports to fuel growth.
Speaking at the “1+10 Dialogue” in Beijing, Li called on leaders from the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO), and others to strengthen global governance. He noted the increasing number of economies imposing levies on imported goods, including China. Li emphasised that the “mutually destructive consequences of tariffs are becoming increasingly apparent, and calls from all sides to uphold free trade are growing ever stronger.”
Analysts contend that China’s substantial trade surplus and reluctance to shift away from an export-driven economy are contributing to the rise of global tariffs. Despite growing international pressure, there appears to be little incentive for Beijing to alter its course, leading to heightened competitive tensions and calls for protectionist measures worldwide. French President Emmanuel Macron recently threatened Beijing with tariffs during a state visit.
Data indicates that China’s strategy to diversify its exports since the U.S. election in November 2024 is proving successful, with increased shipments to Europe, Australia, and Southeast Asia. However, HSBC’s chief economist for Asia-Pacific, Fred Neumann, notes that while tariffs can distort trade flows, they do not address fundamental macro-imbalances. China maintains its commitment to reducing reliance on credit-driven manufacturing and exports, with plans to stimulate domestic demand.
