Too Much Made in China

China’s export dominance is creating dangerous dependencies for trading partners and will eventually force coordinated action by developed economies.

• In 2026, China is expected to export more than $300 billion of semiconductors and microassemblies and approximately $400 billion of lithium-ion batteries, motor vehicles, and auto parts.
• China’s trade surplus reached $1.2 trillion in 2025, up 1,055% in 20 years; its latest monthly surplus was $133.5 billion, supported by a 36.3% year-on-year rise in exports to $447.2 billion.
• More than 75% of countries trading with China ran a trade deficit in 2025, while the main surplus countries generally exported commodities or critical technology inputs such as semiconductors.
• The European Union’s trade deficit with China rose 26% in the first nine months of 2026, with monthly deficits above $30 billion for six consecutive months; India’s year-to-date deficit reached $106 billion, versus $88 billion in the same period of 2025.
• Rare-earth exports were only $3.4 billion year to date, or about 0.1% of China’s exports, but their importance reflects the wider vulnerability created by Chinese control of critical supply-chain chokepoints.

Takeaway: Developed economies may need to act together to rebuild domestic industrial capacity and reduce dependence on China, while China must rebalance away from exports toward domestic growth or risk worsening the threat to global growth.