By Abdul Wajid Khan

The debate over global trade imbalances at a recent G20 meeting has put China’s industrial competitiveness in the spotlight. The country’s widening trade surplus highlighting the strength of its manufacturing base, global demand for value-added goods and continued efforts to expand market access.

At the meeting held under the US G20 presidency, Washington pushed for stronger international action against what it described as “excessive imbalances” and “non-market policies”, while China opposed the language, arguing that such accusations could legitimise protectionism and disrupt global trade.

The discussion has brought renewed attention to China’s trade performance. The country’s global trade surplus reached about $1.2 trillion in 2025, prompting debate among major economies over the factors driving its export strength and implications for the international trading system.

US Treasury Secretary Scott Bessent argued that weak domestic demand and China’s reliance on exports contributing to global imbalances. He pointed to industrial subsidies and state support as factors behind the expansion of Chinese manufacturing capacity.

Speaking to Wealth Pakistan, Dr Vaqar Ahmed, senior economist and Joint Executive Director at the Sustainable Development Policy Institute (SDPI), Islamabad, offered a different assessment.

“In my opinion, this surplus is driven overwhelmingly by industrial competitiveness and strategic openness, not by weak domestic demand or state handouts,” he said.

Dr Ahmed previously served as an adviser to the United Nations Development Programme (UNDP) and has undertaken assignments with the Asian Development Bank, World Bank and Pakistan’s ministries of Finance, Planning and Commerce.

He said China’s export strength reflected genuine global demand for its value-added products alongside its efforts to expand trade openness.

He pointed to tariff reductions and measures aimed at widening access to the Chinese market as evidence that the country was pursuing greater international economic engagement.

“With zero-tariff access granted to 53 African nations and tariffs slashed on nearly 1,000 products, I see clear evidence that China’s market is a cooperation platform for the world. The surplus, in my view, reflects genuine global demand for Chinese value-added goods and China’s role as a stabiliser of trade, not a consumption shortfall,” he said.

Dr Ahmed said China’s decision to provide zero-tariff access to African countries was particularly significant because it expanded opportunities for developing economies to access the Chinese market without requiring reciprocal concessions.

China has also sought to encourage imports through the China International Import Expo (CIIE), which has been held annually since 2018. Media reports suggest that over eight editions, the expo has recorded intended transaction volumes exceeding $580 billion.

Beijing presents the CIIE as an important platform for opening its large domestic market to international businesses and creating new opportunities for overseas exporters.

China maintains that its manufacturing competitiveness is primarily driven by technological innovation, economies of scale, extensive supply-chain integration and market competition. It rejects the argument that industrial subsidies alone explain its export performance, noting that industrial policies are also widely used by other major economies to support strategic sectors.

The G20 discussion has consequently highlighted broader differences over the direction of international trade and industrial policy at a time when tariffs, subsidies and strategic trade measures are becoming increasingly prominent in major economies.

Dr Ahmed said the lack of consensus at the G20 should not be interpreted as a collapse of the global economic order, but as evidence of widening differences over trade policy.

“I have noted that while some economies retreat behind barriers, China stays committed to multilateralism and shared growth,” he said.

“The G20 deadlock, to me, highlights US-China divergence over trade philosophy, but I firmly believe that China’s continued stability and openness prove that global cooperation remains viable.”

China has continued to expand its economic engagement through trade agreements, tariff reductions and market-opening initiatives, while strengthening commercial ties with developing economies, particularly across the Global South.

Dr Ahmed said this approach could become increasingly important as countries seek stable trade, investment and financing relationships amid changes in the global economic environment.

He described China as “a stable anchor for international finance and a reliable partner for the Global South, regardless of Western-led friction”.

The debate also comes as major economies increasingly integrate industrial policy with broader economic and national-security objectives. The United States has expanded the use of tariffs and industrial incentives to strengthen domestic manufacturing, while China continues to emphasise multilateral trade, industrial development and wider economic integration.

Dr Ahmed said the differences highlighted at the G20 reflected contrasting approaches to the future of international economic cooperation rather than an end to opportunities for multilateral engagement.

He said China’s combination of industrial competitiveness, a large domestic market and continued engagement with developing economies could help sustain trade and investment opportunities at a time when protectionist pressures were increasing in parts of the global economy.

For developing countries, he added, continued access to the Chinese market and deeper economic cooperation could provide opportunities to expand exports, attract investment and participate more extensively in regional and global value chains.

Dr Ahmed said China’s continued commitment to openness and economic stability demonstrated that cooperation remained possible despite differences among major economies, with its industrial strength and expanding trade relationships positioning it to remain an important contributor to global commerce.

Credit: INP-WealthPk