China’s expanding trade surplus is not viable for the world economy, warns Charlene Barshefsky, a former US Trade Representative. She feels that without structural reforms, China’s export-driven model will face increasing backlash.
China’s trade surplus hit a record $992 billion in 2024, and exports fueled nearly a third of economic growth. Barshefsky feels China suppresses domestic consumption while over-reliant on manufacturing, fueling global trade tensions.
Having aided China’s entry into the WTO, Barshefsky credits the accession with lifting millions from poverty and propping up world demand during the 2008 financial crisis. However, she says China has since shifted course, embracing state-driven manufacturing and over-exporting. “We don’t have a supply problem in the world, we have a demand problem,” she said, characterizing China’s policy as too statist.
The other US officials, including Treasury Secretary Scott Bessent, have urged China to boost domestic expenditure. Beijing has shown itself willing to alter course, partly due to fresh US tariffs by President Trump. Nevertheless, despite a 20% tariff increase, China’s exports grew 2.3% in early 2025 as businesses rushed to fill orders prior to the curbs tightening.
Barshefsky warns that if China does not undertake deeper domestic reforms, global backlash against its exports will grow. However, she also points out that the US must address its own trade deficits by closing its fiscal deficit, bringing back supply chains, and attending to displaced workers.
“More important than China in solving trade imbalances is the United States,” she said, urging to preserve manufacturing and economic stability. If not addressed by both sides, tensions can be anticipated to persist, impacting global trade dynamics.
