// ECONOMIC SECURITY: MACROECONOMIC AND FINANCIAL POLICY
Widening trade and savings imbalances, driven by China’s export-led growth and weak domestic demand, are reshaping the global economy. The G7 must overcome structural and political constraints to deliver meaningful adjustment China, currency policy and the limits of G7 action
Brad W Setser, Council for Foreign Relations
F rance has placed global imbalances – presidency. Imbalances are a polite framing of US president Donald Trump’s concerns about trade. But there is a fundamental reason for imbal- ances to return to the international economic agenda: China. China’s growth since the Covid- 19 pandemic – and since its property boom went bust – has been lopsided. Domestic demand has been anaemic. Since 2020, net exports have added six percentage points to China’s growth – and three over the last two years. Its physical exports have increased by around 40%. Yet there has been no real growth in China’s imports. Its automo- bile imports have fallen from around one million cars a year to under half a million; vehicle exports have gone from around one million a year to over nine million. This directly relates to Europe’s concern about unbalanced trade. China’s exports have grown over two times as much as its global trade over the last three years. Europe’s exports have stag- nated. Nowhere is this more true than in surpluses and deficits in trade and savings – at the centre of the agenda of its 2026 G7 Germany – where net exports have subtracted four points from growth over the last six years. China’s boom has come at Germany’s expense.
40 // G7 FRANCE: THE ÉVIAN SUMMIT 2026
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