Trump was wrong. Tariffs haven’t hurt China, Pg13

Key Highlights:

• China's trade surplus reached a record $1.19 trillion in 2025, surpassing the previous year's $980 billion.
• Global trade is projected to exceed $35 trillion in 2025, a 7% annual increase, driven by AI-related goods and front-loading ahead of tariff hikes.
• Despite tariffs, China compensated for export losses to the US by increasing exports to ASEAN (13.4%), the EU (8.4%), Africa (25.8%), and the UK (7.8%).
• China's RMB strengthened 4.4% against the dollar in 2025, but analysts believe it remains undervalued by as much as 25%.

Detailed Insights:

• Despite protectionism, global trade remained resilient due to demand stickiness and China's central role in global supply chains.
• Trump's tariffs on allies hindered consensus against China's industrial overcapacity, impacting global trade dynamics.
• China maintains its position as the world's largest manufacturer, accounting for approximately 30% of global manufacturing output.
• De-risking efforts to counter China's manufacturing dominance are likely to be a long process that Beijing aims to delay.
• China's domestic policies, including state subsidies for solar, EV, and battery sectors, contribute to its trade surplus.
• Modest consumption growth in China leads to industrial output being exported, reflected in declining imports from major trading partners.
• The Real Effective Exchange Rate (REER) of the RMB weakened, indicating that the currency depreciated in real terms against major trading currencies.

Key Concepts Involved:

• Trade Surplus: The amount by which the value of a country's exports exceeds the value of its imports.
• Protectionism: Government actions and policies that restrict or impede international trade.
• Industrial Overcapacity: A situation where industries can produce more goods than consumers demand.