Signal China's surplus exceeds Japan's 1987 peak relative to world GDP

Summary

Eurasia Group reports that China's trade surplus, measured as a share of world GDP, is now bigger than Japan's at its 1987 peak. That earlier imbalance helped bring about the Plaza Accord and pushed Japan into a painful adjustment. The report uses the comparison to argue that trading partners will not absorb another country's excess capacity forever, even if they lack short-term leverage. Higher tariffs, renewed US decoupling or a global slowdown could cut foreign demand and leave China with no fallback. At that point Xi would have to shift resources toward consumption, but the report warns it might then be too late.