Sunday, 8 Jun 2025
  • Contact
  • Privacy Policy
  • Terms & Conditions
  • DMCA
logo logo
  • World
  • Politics
  • Crime
  • Economy
  • Tech & Science
  • Sports
  • Entertainment
  • More
    • Education
    • Celebrities
    • Culture and Arts
    • Environment
    • Health and Wellness
    • Lifestyle
  • 🔥
  • Trump
  • House
  • White
  • VIDEO
  • ScienceAlert
  • Trumps
  • Watch
  • man
  • Health
  • Colossal
Font ResizerAa
American FocusAmerican Focus
Search
  • World
  • Politics
  • Crime
  • Economy
  • Tech & Science
  • Sports
  • Entertainment
  • More
    • Education
    • Celebrities
    • Culture and Arts
    • Environment
    • Health and Wellness
    • Lifestyle
Follow US
© 2024 americanfocus.online – All Rights Reserved.
American Focus > Blog > Economy > China’s Trade Surpluses are Not a Source of Strength
Economy

China’s Trade Surpluses are Not a Source of Strength

Last updated: March 24, 2025 11:48 am
Share
China’s Trade Surpluses are Not a Source of Strength
SHARE

In his latest publication, Dawn’s Early Light: Taking Back Washington to Save America, Kevin Roberts from the Heritage Foundation asserts that “China believes it has a mandate to rule the world” and is leveraging trade balances to achieve this ambition.

Roberts points out that this strategy is not new. “As far back as the Roman Empire,” he notes, “the global demand for Chinese goods far outstripped what China sought from other nations… This trade imbalance has significantly influenced the global economy—archaeological digs have unearthed coins from various continents in China, yet no ancient Chinese coin has ever been found outside East Asia.”

He further explains, “China’s economic supremacy, its monopoly over coveted goods, and its meticulously managed trade policies have generated enormous wealth for its rulers, albeit not for the general populace.” Indeed, estimates by Angus Maddison reveal a decline in per capita GDP in China from 106% of Britain’s in 1000 to 71% in 1500 and plummeting to 28% by 1880.

However, the benefits of these trade surpluses did not shield China’s leaders from adversity. When Britain opted to forcibly open China to trade in 1839, the Qing dynasty realized that its accumulated treasures were no match for Queen Victoria’s naval might. Those coins might have been more effectively allocated toward armaments than buried in the ground for future archaeologists to ponder. The nation with the trade deficit ultimately emerged victorious, proving that “before 1839,” as Roberts remarks, “trade was in favor of the Chinese,” yet the ensuing consequences were disastrous: military defeat, political fragmentation, and a subsequent plunge into communism.

See also  Cybersecurity firm SailPoint returns to markets as the first major tech IPO of the year

Roberts contends that China’s:

…traditional approach of amassing massive trade surpluses should not have been viable in today’s monetary landscape, as modern currency is not gold-backed (unlike the wealth of gold and silver that flowed to China under the Canton System). The surpluses generated by exporting more than imports should have led to a rise in the value of the yuan and a decline for its trade partners’ currencies. Over time, this would have rendered Chinese products more expensive and less appealing for outsourcing…

“Yet that never materialized,” he argues, “because China resorted to illegal currency devaluation, which harmed its citizens while ensuring that the CCP’s strategy of eroding Western manufacturing and reclaiming China’s position as a global economic powerhouse would succeed.”

Despite this strategy, the benefits appear limited. While GDP per capita in China has increased from a mere 7% of Britain’s in 1950 to 34% in 2018—levels not seen since around 1770—Roberts accurately notes that currency manipulation has led to decreased real incomes for its citizens. Moreover, the monetary expansion required to maintain the yuan’s exchange stability against the dollar has contributed to one of the largest property bubbles in history.

“Even a domestic spending and debt frenzy in China could not absorb all the trade imbalance,” Roberts observes, revealing that a U.S. trade deficit must be counterbalanced by a capital account surplus:

To sustain its export advantage, China employed a cunning tactic: it invested in the United States, purchasing American assets with U.S. dollars. This not only bolstered the dollar’s value (keeping Chinese products competitively priced) but also aimed at acquiring U.S. companies, real estate, and amassing trillions in U.S. government debt. Currently, the CCP holds a staggering $3 trillion in assets, many of which are American.

See also  Reverse mortgage vs. home equity loan vs. HELOC: Which is best?

However, this accumulation may not be as advantageous as it appears. Possessing a considerable amount of depreciating U.S. government debt is not a position of strength. China cannot liquidate these holdings without jeopardizing their value—something the U.S. government seems to be doing quite effectively on its own. As for the U.S. assets, like farmland, they are not going anywhere—much like the properties that caused considerable distress for the Japanese in the 1980s.

While it is true that China’s government may be pursuing a trade surplus as a strategic policy to bolster its position against competitors like the United States, historical precedence suggests that the outlook for Beijing is grim. The Qing dynasty’s fate serves as a cautionary tale, as does the trajectory of the Communist Party itself.


John Phelan is an Economist at Center of the American Experiment.

TAGGED:ChinassourcestrengthSurplusesTrade
Share This Article
Twitter Email Copy Link Print
Previous Article Artificial Intelligence: Transforming Law Enforcement And The Justice System Artificial Intelligence: Transforming Law Enforcement And The Justice System
Next Article Jennifer Aniston & Pedro Pascal Are Not Dating Despite Romance Rumors Jennifer Aniston & Pedro Pascal Are Not Dating Despite Romance Rumors
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Posts

In 1st Meet Under Trump 2.0, Quad Sends Strong Warning To China

Washington DC: US Secretary of State Marco Rubio convened the first Quad ministerial meeting with…

January 21, 2025

Lakewood approves developer’s apartment plan at edge of Belmar Park

The Lakewood Planning Commission has given the green light to a proposed apartment building on…

May 8, 2025

Why Fall Thrifting Is The Ultimate Autumn Fashion Hack

Fall is a time of transition, as the leaves change colors and the air grows…

September 23, 2024

Huge Samsung Health AI Update Will Upgrade Galaxy Wearables for Free

Samsung has made a big announcement regarding updates to its Health platform, promising new AI…

January 9, 2025

Best Movies for Valentine’s Day If You Just Went Through a Breakup

Valentine's Day is typically a time for love and romance, but what if you're going…

February 14, 2025

You Might Also Like

Mortgage and refinance interest rates today, June 8, 2025: A sharp turn higher
Economy

Mortgage and refinance interest rates today, June 8, 2025: A sharp turn higher

June 8, 2025
Musk vs Trump is a cautionary tale for Silicon Valley
Economy

Musk vs Trump is a cautionary tale for Silicon Valley

June 8, 2025
Best high-yield savings interest rates today, June 8, 2025 (best accounts offering 4.3% APY)
Economy

Best high-yield savings interest rates today, June 8, 2025 (best accounts offering 4.3% APY)

June 8, 2025
China arms itself for more export control battles
Economy

China arms itself for more export control battles

June 8, 2025
logo logo
Facebook Twitter Youtube

About US


Explore global affairs, political insights, and linguistic origins. Stay informed with our comprehensive coverage of world news, politics, and Lifestyle.

Top Categories
  • Crime
  • Environment
  • Sports
  • Tech and Science
Usefull Links
  • Contact
  • Privacy Policy
  • Terms & Conditions
  • DMCA

© 2024 americanfocus.online –  All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?