China Trade Surplus Highest in World History

Mark O'Neill January 15, 2025 22:23

In 2024, China posted a trade surplus of US$990 billion. It was both a record for China and also a record in world history, exceeding the surpluses of the U.S., Japan and Germany in comparative terms.

Exports of goods and services were US$3.58 trillion, up 10.7 per cent on 2023, and imports US$2.59 trillion, up one per cent.

Since its last trade deficit in 1993, China has run a surplus for 21 consecutive years. The 2024 figure exceeds by a large margin the record surpluses achieved by the U.S. in 1947, Japan in 1993 and Germany in 2017 when adjusted for inflation.

China has truly become the “factory of the world”. It produces about a third of the world’s manufactured goods, according to the United Nation. That is more than the U.S., Japan, Germany, South Korea and Britain combined. It has become the world’s largest exporter of cars, surpassing Japan, South Korea, Germany and Mexico. It produces almost all of the world’s solar panels.

Its next target is to overthrow the duopoly of Airbus and Boeing in the global market for passenger jets. In May 2023, the Comac C919 narrow-body airliner went into commercial service with Chinese airlines and is flying on routes in China. It has 130-240 seats.

Under the “Made in China 2025” plan issued by President Xi Jinping in 2015, China has invested at least US$1.7 trillion to improve its manufacturing ability in 13 key technologies. It has become a world leader in five --high-speed railways, graphene, unmanned aerial vehicles, solar panels, electric vehicles and lithium batteries – and is making rapid progress in the other seven.

Xi wants China to overtake the United States and become the world’s number one economic and manufacturing power. He likes to say: “東升西降” (the East is rising, the West is declining).

But the astonishing surplus of 2024 is unlikely to be repeated. China’s trading partners can no longer accept such a level of imports.

“China is making a major mistake in producing two or three times domestic demand in a number of areas, whether it is steel, robotics or electric vehicles, lithium batteries, solar panels and then exporting the excess all round the world,” said Nicholas Burns, U.S. ambassador to China. One third of its surplus last year was with the U.S.

This leaves no alternative for President Donald Trump, who takes office on January 20, but to carry out his threat to impose tariffs on Chinese imports. He has threatened to use a level of 60 per cent.
Anticipation of the tariffs was a major reason why the surplus in December reached US$104.8 billion, a record for a single month, as companies rushed to ship goods ahead of Trump’s inauguration.

Europe’s relationship with China has also deteriorated. “There is enormous amount of uncertainty about what’s happening in the Chinese economy, how the demand situation is going to develop, trade tensions and, to some extent, the reliability of Chinese data,” said Jens Eskelund, president of the EU Chamber of Commerce in China, said in a report issued this month.

“China’s state-led system with its extensive use of industrial policy, among other tools, to support exports and globalise its companies has created major distortions in global markets. Attempts to increase market access or to spur China to become a more market-driven economy have failed. The EU’s role as a major global exporter has been hollowed out,” said Alicia Garcia-Herrero and Abigael Vasselier in a report last October funded by the European Union.

Resistance to Chinese imports is also coming from many other countries who see a threat to their own domestic industries. Brazil, Turkey, India and Indonesia have all implemented barriers to Chinese imports.

Last year’s record surplus was vital to offset China’s weakening domestic economy. Its trade surplus in manufactured goods represented 10 per cent of its economy. The property market is in a long-term slump and retail consumption is weak.

“I receive payments of 2,000 yuan a month,” said Millie Lee, 54, who was retired from her company in Guangzhou last year. “That is not enough to live on. I rely on money from my parents. They are the luckiest generation, with an apartment and a good pension. They have spending power and can even go on holiday.

“Worst off are the young. Thousands of university graduates have no job or deliver goods on scooters. Is that the purpose of studying so hard for 16 years? How much did their parents invest in their education? They cannot buy an apartment and have no good prospects,” she said.

To sustain its economic growth this year, Beijing is under enormous pressure to continue this extraordinary trade growth. It is expected to announce 2024 GDP growth of about five per cent. Many foreign analysts put the real figure at three per cent or even less.

Mark O'Neill

A Hong Kong-based writer, teacher and speaker.