China has pushed back against growing international criticism of its expanding trade surplus, arguing that the imbalance reflects structural shifts in global demand rather than deliberate distortion.
Speaking at the China Development Forum in Beijing, central bank governor Pan Gongsheng said China’s current account surplus is redistributed globally through outbound investment by companies and financial institutions, supporting global liquidity.
Global concerns over trade imbalance
The remarks come as China’s exports have accelerated sharply in early 2026, driven by strong demand for electric vehicles, batteries, machinery, and low-cost manufactured goods. However, economists caution that part of the increase reflects short-term factors, including front-loaded orders and base effects.
China’s goods trade surplus reached about $1.2 trillion in 2025, the highest on record. Investment bank Goldman Sachs has projected the country’s current account surplus could rise to around 4.3% of GDP in 2026, reflecting continued external strength.
Overcapacity and weak demand
Independent analysts point to deeper structural issues, particularly industrial overcapacity in sectors such as electric vehicles, solar panels, and steel. Production capacity has expanded faster than global demand, leading to increased reliance on exports.
At the same time, domestic consumption remains relatively weak compared to China’s manufacturing output. Slower household spending and cautious business investment have limited internal demand, reinforcing the trade imbalance.
Protectionism risks rise globally
The surge in Chinese exports has intensified tensions with major trading partners. Both the United States and the European Union have raised concerns over the impact of low-cost imports on domestic industries.
European regulators have stepped up scrutiny of Chinese electric vehicle imports, while the United States continues to maintain tariffs and trade restrictions across key sectors. Policymakers warn that persistent imbalances could trigger a broader shift toward protectionist measures.
China signals limited market opening
In response, Premier Li Qiang said China would expand market access in the services sector and increase imports of high-value goods, including medical products.
China also highlights its large services trade deficit as a counterbalance to its goods surplus, reflecting spending on tourism, education, and intellectual property.
Outlook: adjustment or escalation
The trajectory of China’s trade position in 2026 will depend on whether policy measures can rebalance growth toward domestic demand. Without that shift, continued export expansion risks deepening global tensions and accelerating trade restrictions.
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