This op-ed originally appeared in het Financieele Dagblad.
As China’s record-breaking trade surplus exceeded $1 trillion this year, it intensified not only global trade tensions but also renewed calls in Washington for tougher tariffs and wider export controls – reviving fears of a second China shock, and intensifying pressure on U.S. policymakers to respond.
Beijing was quick to push back. China’s General Administration of Customs offered a pointed critique of its largest trading partner, with senior official Wang Jun arguing that the surplus would have been far smaller had the United States not imposed export restrictions on high-tech products.
The implication was clear: U.S. policy, not Chinese strategy, is artificially inflating the trade gap. That criticism, however, rings hollow when viewed against the broader trade picture. It obscures a deeper shift in how China now engages with the global economy.
In most manufacturing powerhouses, booming goods exports are accompanied by rising imports of commercial services such as logistics, finance, engineering, software, and business services. These inputs are essential to modern export production and the smooth functioning of supply chains. Countries ranging from South Korea and Slovakia to Mexico and Malaysia illustrate this pattern: as goods exports expand, services deficits typically widen.
China long followed the same trajectory. As its goods surplus accelerated in the mid-2000s, its services trade deficit deepened sharply, by nearly 700 per cent, reaching roughly $280 billion in 2018.
Since then, China has diverged. Unlike other export-oriented economies, where services deficits continued to widen alongside rising goods exports, China’s services deficit has narrowed sharply, to around $160 billion today. The result has been an unusual compression of services imports and, by extension, automatically larger trade surplus.
This shift matters. Had China continued importing services at the pace observed before 2018, its services deficit today would likely approach $370 billion – enough to erase a large share of its headline trade surplus. Even generous assumptions about removing U.S. export controls overnight and dramatically rising U.S. high-tech exports, would not come close to closing such a gap.
Chinese policymakers have long pledged to rebalance growth toward household consumption, especially in services. A stronger shift toward domestic services consumption like insurance and software would naturally increase reliance on foreign services.
It would also narrow China’s external surplus while expanding imports from economies with strong comparative advantages in high-value services – areas where the United States is globally competitive, such as cloud computing, financial services, engineering, and business consulting
Mr Wang’s critique focuses on U.S. trade restrictions, but here too China’s position is vulnerable. By OECD measures, the United States remains among the world’s most open large economies when it comes to services, platforms, and digital trade while China imposes far tighter restrictions – making Beijing’s accusations of U.S. protectionism harder to sustain.
Beijing may argue that these barriers reflect a broader strategy of self-reliance, mirroring its approach to manufacturing. If so, that stance sits uneasily with accusations of protectionism directed at Washington. It is difficult to fault others for policies that closely resemble one’s own.
The deeper problem is that today’s trade tensions are increasingly misdiagnosed. Tariffs and export controls dominate political debate because they target visible goods. But the less visible battleground lies in services, digital market access, and the regulations governing cross-border exchanges.
As long as barriers to services trade remain high, headline surpluses will persist, no matter how many chips or other high-tech products cross borders. China may frame its surplus as the result of foreign protectionism. The data tell a different story: it is not the lack of exports but the deliberate limitation of imports, especially in services, that is inflating the numbers.
For Washington, the implications are clear. Trade strategies build around tariffs, export controls, and reshoring risk fighting the last war. If trade tensions are to ease, attention must shift to access to services market, including digital platforms and business services, and the rules governing cross-border exchange.
Until that changes, trade imbalances will endure, regardless of how loudly technology controls are blamed.
How can us be blessed
By supporting China more than Americans