US-China relations: make peace, not trade war, to ensure mutually beneficial growth

China’s export performance is accelerating in spite of strong headwinds, putting it at odds with its biggest trading partners, especially the US

If the US and China are to defuse trade tensions, compromise and concessions are needed on both sides to help stabilise global trade imbalances in the long run

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Chinese toymaker Pop Mart’s store in a shopping centre in Beijing. Global demand for Chinese toys and other consumer goods has surged in recent months, driving China’s trade surplus to record levels. Photo: EPA-EFE

Published: 3:30am, 15 Dec 2020Updated: 6:17am, 15 Dec 2020

There is light at the end of the tunnel for the Covid-19 pandemic, global economic activity is booming again and China’s exporters are in the thick of the bounce-back in world trade flows. China’s trade surplus hit a record US$75 billion in November as global demand for its exports surged, putting the economy on track for much stronger growth in the months ahead.

China cannot be blamed for doing what it does best – meeting global demand for consumer, intermediate and industrial goods – but it puts Beijing on a collision course once again with Washington. China’s trade surplus with the United States hit its highest level for two years, raising the spectre of a new showdown.

US President Donald Trump will be gone soon, but the odds are that his successor Joe Biden will not be the soft touch on China trade that some critics suggest. The world still has some way to go before trade tensions ease and global economic conditions can fully recover.

China’s merchandise trade balance is building momentum again, with the annualised surplus for the past 12 months rising sharply. With world economic recovery cranking into a higher gear, China’s annualised trade surplus seems to be heading towards US$550 billion this year.

That is a mark of China’s success as a global manufacturing powerhouse despite the pandemic and the onset of the global recession this year.

In spite of the strong headwinds caused by Trump’s trade sanctions, China’s exports are accelerating, up 21 per cent in November from a year earlier, beating October’s 11.4 per cent gain. This stellar performance puts China at odds with its major trading partners, especially the US which continues to push for a much more level playing field in international trade.