When the Canadian prime minister, Mark Carney, took to the podium at the World Economic Forum in Davos last week to lament how “great economic powers” were dismantling the international order, it seemed clear that he was talking about the United States. He might have been talking about China as well.
Not a week earlier, Beijing had revealed that China’s trade surplus ballooned by 20% in 2025, to $1.2tn. Despite Donald Trump’s wall of tariffs that crashed Chinese sales to the US, its overall exports expanded more than 5%. Sales to the 11 countries in Asia’s Asean bloc increased more than 13%. Exports to the European Union rose over 8%. Chinese imports, by contrast, were flat.
This gargantuan imbalance is strangling manufacturers from rich countries in Europe to poorer nations in Asia and Latin America. As Eswar Prassad, a former head of the China division at the International Monetary Fund, now at Cornell University, pointed out: “Forget Trump’s Tariffs. The Real Danger Lies in China’s Trade Surplus.”
Many factors contributed to the implosion of American governance. But Trump’s rise was largely propelled by a sense of grievance against a world order that, Americans believed, had taken the US for a ride.
America’s pain was largely self-inflicted. Manufacturing’s footprint shrunk in Germany over the last quarter century, like it did in the US. It shrunk in the UK and France, Italy and Japan. While those shifts have caused domestic political disruptions, in none of these other countries did voters try to punish the rest of the world for the loss, as Trump has.
Everyone was happy when they could outsource dirty and labor-intensive jobs to China and benefit from the cheap products. China gladly took on these tasks and built a monopoly. Now, it is the sole source for most minerals and rare earth elements because everyone else stopped producing them. China is now moving up the value chain, processing these raw materials into higher-value products. However, the world has become so dependent on China’s mineral supplies that countries cannot block trade with China without risking their own production halts, since China could also stop selling the materials they rely on. This is already happening with rare earth minerals and other critical resources like tungsten.
Only way put of this would be a long time strategic investment into local manufacturing capacities, but it will cost a lot and take a lot of time. And China will dump the prices until those companies go out of business again and then we are back at the start. Happened with solar, is happening with batteries, I wonder what will be next…