China’s export model nears breaking point, warns Michael Froman

China’s export machine has been running hot for years. Michael Froman, president of the Council on Foreign Relations and former US Trade Representative, is now arguing it’s about to overheat.

Writing in Foreign Affairs, Froman lays out a case that China’s growth model, built on flooding global markets with cheap goods, is approaching a structural wall. The core problem: the rest of the world simply can’t absorb what China keeps producing.

The numbers tell a stark story

China’s goods trade surplus swelled to nearly $1.2 trillion in 2025. That’s not just big, it’s growing at roughly three times the pace of global goods trade overall.

In early 2026, that surplus was expanding by more than 20% year-over-year.

Two sectors stand out as particularly aggressive growth engines. Chinese vehicle exports, led by electric vehicles, climbed 21% in 2025 to reach $142 billion. Lithium-ion battery shipments hit $77 billion the same year.

Why the model is running out of road

The IMF projected global economic growth at just 3.1% for 2026. That’s not the kind of expansion that can comfortably absorb a Chinese export sector growing at triple the global rate.

Froman served as US Trade Representative under President Obama from 2013 to 2017, and was Deputy National Security Adviser for International Economic Affairs prior to that. His current role leading the Council on Foreign Relations gives him a perch that straddles policy analysis and establishment consensus-building.

What investors should watch

For market participants, Froman’s warning flags several risk vectors worth monitoring closely.

Sectors deeply integrated with Chinese manufacturing, including consumer electronics, automotive, and renewable energy, carry concentrated exposure to any disruption in China’s export engine. The 20%-plus growth rate in early 2026 trade surpluses represents a widening gap between what China produces and what the world can sustainably absorb.

The broader macro risk is that a Chinese export adjustment coincides with already-tepid global growth. A 3.1% global GDP expansion doesn’t leave much cushion.

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