WTO chief warns China’s $1.2 trillion trade surplus is unsustainable

10:20

By: Dakir Madiha

WTO chief warns China’s $1.2 trillion trade surplus is unsustainable

World Trade Organization Director General Ngozi Okonjo-Iweala has urged China to rethink its export-driven growth strategy, warning that the country’s record $1.2 trillion trade surplus cannot be sustained because the rest of the world is unable to absorb it.

Speaking at the Munich Security Conference, Okonjo-Iweala said the model that powered China’s rapid expansion over the past four decades is unlikely to deliver similar results in the decades ahead. She cautioned that without adjustments, global trade tensions could intensify.

“The export-led growth model that fueled China’s rise over the last 40 years will not be able to support its growth for the next 40 years,” she said. “A $1.2 trillion trade surplus is not viable, because the rest of the world cannot absorb it.”

She added that failure to act could trigger additional trade barriers as countries seek to shield their domestic industries from mounting imbalances.

China’s trade surplus reached an unprecedented $1.2 trillion in 2025, marking a 20 percent increase from the previous year, according to data from the General Administration of Customs of China. The milestone was achieved despite a sharp decline in trade with the United States, as tensions between the two largest economies escalated following Donald Trump’s return to the White House.

Overall, Chinese exports rose 5.5 percent last year. Manufacturers redirected shipments toward alternative markets after exports to the United States dropped significantly. Shipments to Africa surged 26 percent, while exports to Southeast Asian nations climbed 13 percent. Exports to the European Union increased 8 percent and deliveries to Latin America rose 7 percent.

The WTO chief’s remarks come as European leaders navigate mounting economic pressure from both Washington and Beijing. Data released on Friday showed the European Union’s trade surplus narrowing further in December. Exports from the bloc to the United States declined 12.6 percent year on year amid tariff pressures, while the EU’s trade deficit with China widened to 26.8 billion euros.

European officials have repeatedly called on Beijing to stimulate domestic consumption, which has remained subdued for several years, instead of relying heavily on exports to offset the effects of a prolonged property sector downturn. EU foreign policy chief Kaja Kallas recently described China’s economic practices as a long-term challenge requiring a coordinated response.

Okonjo-Iweala also advocated reforms to strengthen the global trading system, acknowledging that U.S. tariff measures underscore the need for adjustments. She said the system remains resilient but lacks sufficient robustness, and emphasized the importance of updating trade rules to address evolving realities.

The WTO is scheduled to hold its next ministerial conference in Cameroon next month, where trade reform and rising protectionist measures are expected to feature prominently on the agenda.