“自由贸易”是假象，中国真正捍卫的是美元顺差

The Myth of Free Trade: What China Really Defends Is Its Dollar Surplus

China’s propaganda machine portrays China as an economy that advocates globalization and defends free trade.

But the truth is not like that at all.

But in reality, China’s state-owned enterprises have annual revenues that account for over 60% of the total GDP.

As of the end of 2023, the total assets of China’s state-owned enterprises reached 371.9 trillion yuan; the total assets of state-owned financial institutions were 445.1 trillion yuan; and the total assets of state administrative and public service units were 64.2 trillion yuan.

According to the 2024 report on China’s Top 500 Private Enterprises, the combined assets of China’s top 500 private companies are only 49.85 trillion yuan — which is actually less than the total assets of China’s government administrative and public institutions.

Private and foreign-funded enterprises provide over 80% of China’s employment and carry out the vast majority of China’s exports, thereby earning foreign exchange. State-owned enterprises, on the other hand, are mainly responsible for imports, especially imports of bulk commodities. In other words, state-owned enterprises are primarily responsible for spending money.

Do you see how the roles are divided now?

All of the above are public data. These numbers speak for themselves, but they still need someone to interpret them correctly.

Additionally, China imposes severe capital controls, with strict restrictions on overseas investments for both residents and businesses. And capital controls are the mortal enemy of free trade — if even money cannot flow freely, how can there be free trade?

China also enforces press censorship, film censorship, and internet censorship. Western news agencies, publishers, film and television distributors, and internet companies are basically unable to operate in China.

China is a control-oriented state. What it defends is not “free trade” at all, but rather “trade surplus.”

One more time, because it’s important: China is defending not “free trade” but “trade surplus” — meaning the Chinese government’s ability to earn U.S. dollars. Only as long as a surplus of U.S. dollars keeps coming in can the state-owned enterprises and the government have “money to spend.”

Meanwhile, state-owned enterprises and the government are very inefficient at spending money. But there’s no helping it — the system was designed this way. This is an extractive system, and it’s also the reason China will never be able to implement any reform of its wealth distribution system. Is the government stupid? Would it really impoverish itself?

Chinese people have to be poor, and can only be poor; the distribution system is set up that way. This distribution system has distorted the distribution of wealth, and even more so has distorted the industrial structure and job market. As a result, Chinese people inevitably end up “involuting.” With a system arranged such that “all profits come out of one hole,” it would be strange if people weren’t involuting.

China must encourage and expand exports and restrict and reduce imports. This is why even in first-tier cities like Shenzhen and Shanghai — where per capita GDP exceeds $20,000 (almost reaching the level of a moderately developed country) — the legal minimum wage is only a little over 2,000 yuan（80USD/week).

In the 1960s, Zhou Enlai had a saying: “Everything for foreign trade.” Despite how difficult life was for the Chinese populace, China still exported large quantities of grain, cotton, meat, and cooking oil…

“Everything for foreign trade” remains China’s national policy to this day. To put it bluntly: everything is for the surplus, everything is for U.S. dollars.

If the Chinese people became affluent, then foreigners would no longer be able to afford “Made in China” products. Moreover, if Chinese people had money, they’d go abroad to spend it, buy houses overseas, emigrate, and so on… In that case, China’s balance-of-payments surplus would disappear, and the government would become poor.

Just look at Japan’s government — it’s very poor. Japan’s international balance of payments surplus comes from the returns on private investments overseas. The Japanese government carries debt, leaving the wealth in the hands of the citizens and private enterprises…

Japan’s government debt is the highest in the world, over 200% of GDP — it’s almost bankrupt. Yet the Japanese aren’t worried, and the Chinese are even less worried about that. In fact, many wealthy Chinese are willing to go live in Japan, and they even send their children there to study or immigrate.

Japan’s system is relatively free, its government operates transparently, and there are no capital controls. Welfare is assured, the quality of life is high, and job opportunities are plentiful… Plus, with the yen’s depreciation, it has become even more cost-effective for Chinese people to migrate to Japan.

Only a free country can have free trade.