Despite sharp differences across many policy areas, the Trump administration is echoing a major economic concern of its predecessor: the need for China to rebalance its economy. Treasury Secretary Scott Bessent has continued pressing Beijing to shift away from its export-driven growth model, a sentiment previously championed by former Treasury Secretary Janet Yellen under President Biden.
Why It Matters:
Both administrations share frustration over China’s long-standing strategy of exporting its surplus goods, a practice American officials argue harms domestic industries and disrupts global markets. Trump’s approach, however, leans on sweeping tariffs, while Biden applied more targeted trade measures.
“China exports the excess of what it produces,” Bessent told CNBC, adding that the Chinese economy was “built on exporting its way out of economic troubles.” In recent remarks at the Institute of International Finance, he stressed the urgency of rebalancing both the Chinese and U.S. economies, warning of global consequences if China doesn’t stimulate domestic demand.
The Bigger Picture:
China’s growth over the past two decades has leaned heavily on manufacturing and exports. However, domestic consumption remains weak due to a limited social safety net and high household savings rates. The problem worsened during the pandemic and China’s ongoing property crisis, fueling further global scrutiny.
Biden vs. Trump Strategies:
The Biden administration called for reduced Chinese industrial subsidies and more support for Chinese households to boost local demand. Yellen, in a 2024 speech in Beijing, warned that China’s overcapacity was a threat to global economic stability.
Trump’s team has implemented blanket tariffs, with Bessent pointing out that previous 145% tariff levels redirected Chinese goods to global markets at discounted prices, undercutting local producers worldwide.
What’s Next:
While Bessent insists the U.S. aims to help China change rather than dictate policy, he noted that other countries are already reacting to the influx of cheap Chinese exports. Meanwhile, mixed signals from the Trump administration suggest a potential easing of trade tensions to avoid deeper economic fallout amid recession fears.