Worthy of note not just because of the data itself, but also because of its source. The center-Left Brookings Institute and its senior fellow Robin Brooks warns that China's global trade manipulations hit their peak just as Donald Trump came to office -- and essentially showed why a sharp change in direction is necessary.
Earlier today, Brooks took a look at China's trade surplus in the first quarter of the year, based on the most recent data. Brooks, a former exec at Goldman Sachs, calls Beijing's attempt to cash in ahead of tariffs by sales of subsidized goods "an order of magnitude higher than any previous surplus," and charts the last quarter-century to demonstrate:
China's global trade surplus in the first 3 months of 2025 reached a stunning $273 bn. That's an order of magnitude higher than any previous surplus in the first 3 months of the year. China is very clearly at the root of major imbalances in global trade, which need to be fixed... pic.twitter.com/cbmsCNnZ0W
— Robin Brooks (@robin_j_brooks) April 14, 2025
Does anyone think this is a coincidence? China knew Trump would return to punishing tariffs once he won the election. Beijing may have anticipated an even earlier push for Trump's policies than the April 2 Liberation Day announcement, but they prepared themselves to cash out in Q1 to the greatest extent possible. And in doing so, they even alarmed the center-Left Brookings Institute about Xi Jinping's manipulation of "imbalances," and has them callom for systemic changes in global trade as a result.
They may not agree with Trump's solution or his manner of application of tariffs. But they are bolstering Trump's argument that the status quo cannot remain in place any longer.
Who's buying all of these subsidized goods? Brooks follows up with another chart showing that Russia receives the lion's share, although this only accounts for a fraction of China's global output. A second chart shows how far China is willing to go into the red to keep Putin afloat, too:
China's trade data are always distorted by Chinese New Year early in the year, which artificially depresses trade data. We're seeing that again in 2025. Now that those distortions are fading, China's exports to Russia (black) are bouncing back. China is Putin's biggest enabler... pic.twitter.com/gPYKvtMZ7m
— Robin Brooks (@robin_j_brooks) April 14, 2025
China's trade with Russia has exploded since Russia's invasion of Ukraine. Imports are up massively (red) as China has imported more oil from Russia, helping fund Russia's war in Ukraine. Exports to Russia are also up lots (blue). China helps keep Russia's war economy going... pic.twitter.com/0VSQOJ1zLr
— Robin Brooks (@robin_j_brooks) April 14, 2025
So not only is China massively flooding global trade with its subsidized goods -- much of it made with imprisoned labor -- it's using the imbalance to keep Vladimir Putin afloat, too. That should wake up the rest of the West about the nature of the Xi regime in China, and the choice that the Trump administration now offers between China and the US.
For now, China seems determined to continue with its manipulative labor and trade policies. China's suppliers believe that they will find other markets to flood:
The Americans, or their representatives, used to show up to buy everything from Paw Patrol plushy dolls to Panama hats to toy sniper rifles. The famous Yiwu market here has 75,000 vendors across an area bigger than 1,000 American football fields; no other place sells so much stuff, so cheaply, and for decades, much of it went to the voracious U.S. consumer.
But with President Trump’s latest tariffs on China, which surged to 145% last week, very little of the merchandise makes economic sense for American buyers now.
Yet during a visit by a Wall Street Journal reporter, vendors said they were confident they would survive, sustained by sales to other buyers, and a bit perplexed. Where would the Americans get all their sparkly keychains, baseball caps and coffee thermoses now?
For some everyday items, such as socks, they said it might not be easy.
“They could get things from other countries, but I don’t know if the other countries can produce them as well as China,” said Zhou Li of socks maker Shen Li, referring to the U.S. “China’s ability to make stuff is just seriously incredible.”
That's certainly true ... when the government subsidizes the manufacturing, both directly and indirectly with a serfdom of labor. Only that would allow for the vast manipulation seen in the Brookings' numbers, and that is why even Brookings now understands that it's time for the world to reset trade with China.
Maybe China is getting the message. Xi Jinping just launched a tour of the region, arguing to put an end to trade disputes and return to the same status quo that allows Beijing to manipulate its Western partners:
China’s leader Xi Jinping said no one wins in a trade war as he kicked off a diplomatic tour of Southeast Asia on Monday, reiterating China’s commitment to global trade in contrast with US President Donald Trump’s latest tariffs moves. ...
“There are no winners in a trade war, or a tariff war,” Xi wrote in an editorial jointly published in Vietnamese and Chinese official media. “Our two countries should resolutely safeguard the multilateral trading system, stable global industrial and supply chains, and open and cooperative international environment.”
Xi’s visit lets China show Southeast Asia it is a “responsible superpower in the way that contrasts with the way the US under President Donald Trump presents to the whole world,” said Nguyen Khac Giang, a visiting fellow at Singapore’s ISEAS–Yusof Ishak Institute.
If that's the argument Xi wants to make, then Xi needs to adjust his policies significantly before anyone can trust him. Cutting off Putin's war machine might be a good start, but the crux of the issue is China's conduct of trade, not the conduct of Donald Trump or the West. And I suspect that the Southeast Asian countries lining up to discuss new trade agreements with Trump's team largely agree.
