China's Trade Surplus Fuels Global Imbalance Concerns

Analysts Jean‑Pierre Landau and Sébastien Jean warn that conventional analysis of China’s persistent trade surpluses overlooks the industrial and technological dynamics behind them. China’s industrial exports have surged while imports have stagnated, creating a growing surplus that they describe as a "second China shock" affecting the United States, Europe and the broader global economy.

They argue that the root of today’s imbalances is the increasing concentration of industrial capacity in a few countries and the strategic use of trade and industrial policy. Scale, learning and cumulative production advantages, rather than static comparative advantage, have driven China’s dominance in electric‑vehicle, battery and solar‑panel markets. The authors contend that firms must export to achieve the scale needed for technological leadership and that policy responses must go beyond urging China to consume more, Europe to invest more, and the U.S. to tighten fiscal policy. Instead, they call for policies that shift savings and investment toward tradable sectors and manage exchange rates to address the structural drivers of the imbalance.