“The big issue in my mind is not how much China exports. That’s not the issue. It’s how little it imports.” Neil Shearing reframes the entire China trade debate: the problem isn’t Chinese competitiveness – it’s that China’s export-led model has suppressed domestic consumption.
Populist narratives focus on Chinese exports flooding Western markets. But Shearing identifies the real distortion: China’s export-led growthmodel has suppressed domestic demand and consumption, which means it’s not sucking in as many imports from the US and other Western countries as it otherwise would.
The problem isn’t globalization or trade integration – it’s that integration happened on an unlevel playing field.
The Subsidy Machine
China spends an estimated 5% of GDP on industrial subsidies annually. The WTO was supposed to guarantee a level playing field. China didn’t play by those rules.
And importantly: China is showing no intention of pushing to raise consumption as a share of GDP. The structural imbalance persists. This isn’t a temporary policy – it’s the economic model.
Why This Matters
If China consumed more domestically, it would:
– Import more from Western countries
– Reduce the trade surplus that creates political tension
– Create more balanced economic interdependence
– Make fracturing less necessary
But that’s not happening. China continues to run massive surpluses while suppressing domestic consumption. The imbalance forces the response.
Key Takeaway
The trade debate is misdirected. As geopolitical chokepoint analysis shows, the real issue isn’t what China sells – it’s the structural model that prevents balanced exchange.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
