Bessent Urges G20 to Rethink China Trade Over $1.2 Trillion Surplus

US Treasury Secretary Scott Bessent has called on G20 economies to reassess their trade relationships with China and push Beijing towards stronger domestic consumption.

US Treasury Secretary Scott Bessent has urged G20 countries to reconsider their trade relationships with China, including the possible use of additional trade barriers, arguing that Beijing's huge export surplus is contributing to global economic imbalances.

Speaking to Reuters ahead of the G20 meeting of finance ministers and central bank governors in Asheville, Bessent said major economies should examine their trading arrangements with China and encourage Beijing to shift away from an export-led growth model towards stronger domestic demand.

“The world cannot have a China with a .2 trillion trade surplus,” Bessent said, arguing that China's relatively weak domestic economy was encouraging it to rely increasingly on overseas markets.

Bessent Targets China Surplus

The Treasury secretary's remarks put China's trade surplus at the centre of discussions about global economic imbalances.

Bessent argued that the scale of China's exports was becoming difficult for other economies to absorb. He said countries should examine whether their own trade policies were unintentionally allowing Chinese exports to expand further.

His comments come as governments across the G20 continue to deal with weak growth, shifting supply chains and trade tensions.

Washington has increasingly pushed for policies aimed at reducing China's dependence on exports and encouraging Beijing to stimulate household consumption.

G20 Asked To Reassess Ties

Bessent said the United States would encourage other G20 members to examine their individual trade relationships with China.

“The rest of the world is going to have to examine their terms of trade with China,” he said.

The proposal could put several major economies in a difficult position. China is a major trading partner for countries across Europe, Asia, Latin America and Africa, while Chinese goods remain important to global manufacturing and supply chains.

Any coordinated move towards additional trade barriers could therefore have consequences for prices, investment and international commerce.

US Tariffs Shift Chinese Exports

The United States has already imposed substantial trade barriers on Chinese products.

According to Bessent, high US tariffs and restrictions on certain imports, including automobiles, have contributed to China redirecting some exports towards other markets.

Europe and Latin America have become particularly important destinations as Chinese manufacturers seek alternative markets for goods that face greater restrictions in the US.

Bessent argued that other countries now need to consider whether their own policies are encouraging this diversion rather than addressing the underlying imbalance.

China Faces Domestic Demand Challenge

At the heart of Washington's argument is China's relatively weak domestic consumption.

Bessent wants Beijing to rebalance its economy by encouraging households and businesses to spend more domestically rather than relying heavily on exports to generate growth.

A stronger Chinese consumer market could potentially reduce the pressure on manufacturers to sell excess production overseas.

The US position reflects a broader debate over China's economic model, particularly concerns that excess industrial capacity could result in cheaper Chinese goods flowing into international markets.

Global Trade Imbalances Grow

China's trade surplus has become a major issue in discussions over the future of global commerce.

For importing countries, a large inflow of competitively priced Chinese goods can benefit consumers but may also create pressure on domestic manufacturers.

Governments in several economies have responded with tariffs, subsidies, investment restrictions or other protective measures.

Bessent's call for G20 countries to reassess their trade terms suggests Washington wants the issue addressed collectively rather than through US-China negotiations alone.

G20 Meeting Faces Pressure

The remarks come just before G20 finance ministers and central bank governors meet in Asheville, North Carolina.

Global trade imbalances are expected to be among the major economic issues confronting policymakers.

The discussions are taking place against a backdrop of heightened geopolitical tensions, changing supply chains and uncertainty over monetary policy.

Bessent's comments could increase pressure on G20 members to explain how they intend to manage their economic relationships with China without triggering a broader protectionist cycle.

US-China Trade Ties Tested

Bessent also highlighted what he described as an improving US direct trade position with China, while maintaining that the wider global imbalance remains unsustainable.

Washington's approach reflects a broader effort to reduce its exposure to Chinese manufacturing and persuade Beijing to rely more heavily on domestic demand.

For China, however, exports remain an important source of economic activity and employment, particularly amid challenges in domestic consumption and other parts of the economy.

The debate could therefore become a significant point of contention among G20 economies as they weigh the benefits of open trade against concerns over industrial competition and persistent trade deficits.