Trend Record trade surplus without corresponding corporate earnings

Summary

Eurasia Group reports that China's trade surplus has reached record highs even as its exports to the United States have declined. The pattern shows China still leaning on exports of surplus manufacturing capacity to offset slow growth at home. Southeast Asia overtook the US and Europe in 2023 to become China's biggest export market. Yet company earnings have not grown in step with export volumes, which reflects the price cutting driven by involution. The report expects an even larger wave of cheap goods abroad, deepening frictions with trading partners that increasingly experience deindustrialisation.