China’s trade engine is shifting not slowing

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CHART 1 • China’s trade engine is shifting not slowing

It is easy to assume China’s export machine is fading. Headlines focus on weaker shipments to the US and a softer global economy. But these charts tell a very different story. China’s overall trade surplus has pushed past $1 trillion which is the highest level on record. So what’s happening?

What has changed is where the surplus comes from. Exports to the US have fallen yet exports to everywhere else, especially other Asian countries, has climbed sharply. China has rerouted its trade rather than reduced it. Much of this reflects supply chain rewiring. China ships more components to neighbours who then assemble and re-export their finished goods. Some of it reflects new areas of dominance such as electric vehicles, machinery and low cost consumer electronics. The result is a surplus that keeps expanding even as one of its core markets shrinks.

These charts together show an economy that is adapting to geopolitical pressure not buckling under it. Trade tensions with the US have reshaped its trade routes. China has found new customers faster than it has lost old ones.

Source: Econovisuals

Source: Financial Times

We often mistake stability for stillness. When headlines fade we assume the underlying tension has dissipated. Yet the data suggests that pressure does not disappear so much as it relocates. We are witnessing a global economy that is not slowing down but rather reorganising itself. China is the clearest example of this shift.

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