Daniel Gros points out that subsidies direct surging exports toward favored sectors, but they do not cause the surge.
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Economics
Aug 11, 2026
Daniel Gros
The current China shock combines continued supply upgrading with an absorption problem: the decline in property and related investment has reduced domestic demand, but national saving remains very high. The result is a larger savings-investment surplus that spills into net exports.
Shang-Jin Wei cites the country’s high savings rate as one of the main factors behind its external imbalance.
This series looks at the economic consequences of China’s record trade surplus for the rest of the world
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