The global economic landscape is shifting dramatically, with the waning influence of the United States coinciding with China's rising trade surplus, which is increasingly dominating manufacturing sectors worldwide. But here's where it gets controversial: this surge in China's exports is not just a simple story of competition—it's a catalyst for upheaval across nations, from developed Western countries to emerging economies in Asia and Latin America.
Recently, during the World Economic Forum in Davos, Canadian Prime Minister Mark Carney expressed concern about how major powers are dismantling the established international order. While he was likely referring to the United States, there's a strong case to include China in this critique. Just a week prior, Beijing announced that in 2025, its trade surplus soared by an astonishing 20%, reaching $1.2 trillion. Despite brutal tariffs imposed by Donald Trump—a strategy meant to curb Chinese exports—the total volume of Chinese goods exported grew by over 5%. Exports to ASEAN nations in Asia expanded by more than 13%, while sales to the European Union increased by over 8%. Interestingly, Chinese imports remained relatively flat, signaling a focus on boosting exports rather than imports.
This massive imbalance—where exports vastly outstrip imports—acts like a stranglehold on manufacturers in wealthy European countries and developing nations alike. As Eswar Prasad, a former IMF China division chief now at Cornell University, warned, “Forget Trump’s tariffs. The real danger lies in China’s trade surplus.” The sheer volume of Chinese goods flooding global markets is forcing many nations to confront the fallout—domestic industries are struggling, jobs are threatened, and economic stability is challenged.
This export phenomenon also highlights that the United States’ retreat from the global order it once championed didn’t occur in a vacuum. American support for globalization and democratic ideals was, after all, a cornerstone of its economic and political strength. But over time, the pressures of China’s export-driven growth exposed vulnerabilities, leading to a crisis of confidence and the rise of protectionist sentiments, exemplified by Trump’s administration.
America's struggles have roots in its own neglected social infrastructure. While many other affluent nations—Germany, the UK, France, Italy, Japan—saw their manufacturing sectors shrink over the past few decades, the U.S. responded differently. Instead of building resilience and supporting affected communities, many American regions suffered prolonged decline. The result? A sense of betrayal and economic frustration that fueled the rise of populist movements like Trump’s, especially after the so-called “China shock”—the surge in Chinese imports following its WTO accession in 2001. This sudden influx of affordable Chinese goods devastated manufacturing hubs across the U.S., leaving regions scarred and politically volatile.
What’s especially telling is that the fury directed at China isn’t just about unfair trade practices—though those are real concerns—it stems also from a failure within the U.S. to cushion the blow of global economic shifts through social policies and safety nets. Despite massive wealth creation driven by globalization, many ordinary Americans felt left behind, creating fertile ground for anti-trade sentiments.
China, arguably, bears some responsibility for the current global upheaval. Its aggressive export strategy and practices—such as undervaluing its currency, subsidizing export industries, and keeping its domestic market largely closed—are fueling backlash across the world. The World Trade Organization (WTO) reports over 300 antidumping investigations against Chinese exports since 2020, initiated by nations like Mexico and India seeking to protect their industries. The European Union increasingly criticizes the WTO for failing to address China’s unfair trade tactics, with many calling for overhaul.
A prominent voice in the EU, Maroš Šefčovič, has emphasized the urgent need for a new global trade governance system suitable for the 21st century. He suggests reconsidering the WTO’s foundational “most favored nation” principle—an agreement that requires trading partners to offer identical tariff reductions—arguing it’s no longer fit for purpose given China’s model of undervaluation and state support.
The core issue is clear: the world needs an engaged China that adheres to fair trade practices. If the United States continues to disengage from international law and institutions, the global community risks losing its best counterbalance—China itself—a vital player that could help maintain an open and equitable trading system.
Recently, China expanded its free trade agreements, like the one with ASEAN, and engaged in high-level diplomatic relationships, including state visits to South Korea. But mere cooperation isn’t enough. To truly uphold a liberal trade regime, China must move beyond its current export-led approach, which is surpassing the world’s capacity to absorb its goods.
China argues that its exports bring prosperity to the Global South by boosting raw material demand, but this narrative doesn’t fully withstand scrutiny. Its overwhelming export volume leaves many developing countries struggling to maintain their manufacturing sectors. Even domestically, China’s investment in industry is yielding diminishing returns, and household spending remains low—around 40% of GDP—far below the 60% typical in OECD countries, indicating limited prosperity for ordinary Chinese citizens.
Meanwhile, the United States, by retreating into itself, is offering China a unique opportunity to step into a leadership role in global trade. But if China persists with its current policies, it risks validating the very American critique of globalization—further eroding faith in the system that has largely benefited China itself.
The future of global trade hangs in the balance: will China choose to reform and play by fair rules, or will it continue to assert dominance through unfair practices, risking further fragmentation of the international economic order? And what does this mean for the rest of us? Do we accept the status quo, or push for reforms to ensure a balanced, sustainable global economy? Share your thoughts in the comments—are you convinced that China can be a responsible leader, or are we heading towards a more fractured and protectionist world?
