Bessent Warns China's $1.2 Trillion Trade Surplus Is 'Unsustainable'! Urges G20 to Push Beijing Toward Domestic Demand

U.S. Treasury Secretary Scott Bessent said Sunday (30th) that he will urge G20 members to re-examine trade terms with China to reduce global economic imbalances and push Beijing to restructure its economy, reducing reliance on exports and shifting toward domestic consumption.

According to Reuters, Bessent said in an interview ahead of the G20 finance ministers' meeting that while the direct trade relationship between the U.S. and China is "rapidly improving," China's massive exports to global markets are unsustainable.

"The world cannot afford a China with a $1.2 trillion trade surplus. China's economy is currently very weak, and they are trying to escape this situation through exports. They need to restructure their economy," Bessent said.

As Bessent pushes for coordinated action among nations on China's trade issues, the U.S. is being forced to re-adjust its tariff policies due to legal setbacks. These tariff measures have significantly reduced U.S. imports from China, but have also led to a surge of Chinese goods into other markets, particularly Europe and Latin America.

The U.S. has blocked many Chinese goods from its market through high tariffs and outright bans on certain products, including automobiles. Bessent said he told other industrialized economies last year that a surge in Chinese imports would put pressure on them, and "now they are facing some very tough choices."

"Other countries around the world will have to re-examine their trade terms with China," he said, adding that nations must find ways to incentivize China to reduce its export dependence and strengthen its long-weak domestic demand.

The U.S. is pushing for a G20 joint statement calling for reduced trade and current account imbalances.

According to data from the U.S. Census Bureau, tariff measures implemented after President Trump returned to the White House in 2025 have reduced the U.S. trade deficit with China by one-third in the first six months of 2026 compared to the same period in 2025, down to $73.9 billion.

Imports of certain Chinese goods accelerated in January 2025 as importers rushed to bring in goods before anticipated tariff hikes took effect.

While some economists and European leaders advocate coordinated action to push for yuan appreciation, Bessent questioned the effectiveness of such a move. The International Monetary Fund (IMF) estimates the yuan could be undervalued by up to 21%.

Bessent said the idea that a new "Plaza Accord" could resolve economic imbalances is inappropriate. The 1985 Plaza Accord aimed to coordinate policy to appreciate various currencies against the U.S. dollar.

He called it a "simple way to avoid dealing with the real trade issues," with the real problems being China's excessive industrial subsidies and weak domestic demand.

Next U.S.-China Summit

Bessent said it is unclear whether he will meet personally with his Chinese counterpart, Vice Premier He Lifeng, before the expected meeting between Trump and Chinese President Xi Jinping at the White House in late September.

Bessent said U.S. and Chinese officials will continue discussions ahead of the summit on potentially lowering tariffs on non-strategic goods and on AI safety safeguards to prevent powerful AI models from falling into the hands of non-state actors.

"I think both sides see about $30 billion worth of non-strategic, non-critical goods where tariffs could be removed," Bessent said.

The September summit comes as the U.S. re-adjusts Trump's tariff policies. The U.S. Supreme Court previously overturned broad tariff measures implemented under emergency powers law, including a 20% tariff on Chinese imports, so the U.S. is now rebuilding its tariff framework.

In July, the Trump administration imposed an additional 12.5% tariff on Chinese imports under an anti-forced labor trade investigation; further tariffs could be imposed under another investigation into overcapacity.

Bessent also said he plans to hold bilateral talks with Pan Gongsheng, Governor of the People's Bank of China, during the G20 meeting in Asheville, but declined to provide details.