The Fourth Plenum, setting the frame for the 2026–2030 Five-Year Plan, signals a security-first, substitution-heavy stance and says little about opening markets. That backdrop points to a fortress-surplus decade. Export growth is modest, about 3.1% per year, while friction abroad keeps building. Imports compress by default and by design, dropping 1.4% per year: weak domestic consumption caps demand, and policy-driven import substitution shifts orders to local suppliers.
The external surplus does the heavy lifting: we see net exports at roughly 11% of total goods trade at the start of the decade rising toward 30% by the end, largely by squeezing developing economies, taking a larger slice of their slow-growing import demand and pushing aside local and third-country suppliers. China gains share across parts of the Global South, but not enough to revive the export engine aimed at developed economies; despite the partnership narrative, the surplus must be sourced elsewhere.
The strategy buys time. The 4th Plenum communiqué, does not mention “exports” or “imports” and refers to “trade” only once, in the context of promoting the “innovative development of trade”. In practice, the policy stance prioritises a substantial goods surplus: for every $1 of imports, China targets roughly $1.40 in exports. Net exports remain in double digits as a share of bilateral trade.
As an example, the surplus with Africa in 2025 increases by about $45bn, lifting the surplus share of China–Africa trade to around 31%, from 21% a year earlier. Similar dynamics are visible in Latin America and across other developing regions.
Read against the Fourth Plenum, the message for 2026–2030 is plain: there will be no return to classic export-led sloganeering. The lodestar is a fortress-surplus with substitution playbook. At home, import policy tightens at the margin via standards, procurement, and local-content rules to protect the surplus without advertising it. In short, trade outcomes will be managed as the consequence of a security-industrial strategy.
Policy, settlement choices, big one-off deals, and sanctions routing give them a life of their own.
RMB flows are as much policy and plumbing as commerce
Our 2025 estimate: Russia 18%, Saudi Arabia 14%, Iran 12% (via Malaysia transshipments), Iraq 11% of China’s crude imports. China procures Iranian and Russian crude oil at 5% below the average import price per barrel.
The European Council is the forum of the EU’s national leaders, not the Parliament or the Commission. On 23 October 2025, it invited the European Commission to “make effective use of all EU economic instruments in order to deter and counter unfair trade practices.”
This means using tools like tariffs, anti-dumping and anti-subsidy cases, safeguards, procurement limits, and the anti-coercion instrument (ACI) when needed. On October 23, president Macron urged EU to consider the ACI against China over exports controls.
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Q1–Q3 rare earth magnet exports fell 7% YoY by volume overall, yet shipments to advanced economies fell much faster: EU −10%, U.S. −25%, UK −18%. The gap matters. When the aggregate decline is modest but the drop to specific destinations is steeper, it points to deliberate allocation choices rather than a broad market slump.
Last week we reported the evident diversion of UCO flows from the U.S. to the EU. On October 20, the EU’s Trade-Diversion Monitor placed HS 1518.00.31 on its watch list following a surge in imports.
Germany and Bratislava hub in Slovakia supply 88% of cars; Q1–Q3 imports from Germany −46%, Slovakia −21%. The slide is widespread: Austria’s large-engine models −75%, Italy −43%, wiping out over $6 billion in value in Q1–Q3 alone.
In 2025, following China’s retaliatory measures, imports of French Cognac into China will drop by about $1.2 billion from their 2023 peak.
Retail sales are reported in nominal terms; deflated by CPI, they still grow only about 3.6% year on year, well below real GDP’s 5.2%
Against a 40-hour standard, enterprise employees average 48.6 hours, a 22% overshoot. Surveys of platform workers, excluded from the official statistics, suggest the economy-wide workweek is even longer.
With TFP declining, growth has to come from more inputs (longer hours, more capital) and from net exports. That is precisely the fortress-surplus + substitution path outlined above
In Jan–Sep 2025, average per-capita disposable income was ¥32,509, but the median, the typical person, was ¥27,149, about 16% lower. That gap shows the distribution is pulled up by higher earners.
Officials can say the average real income kept pace with GDP growth (5.2%). But the typical income grew more slowly (about 4.5%), which helps explain why household demand feels soft.
The U.S. announced it will examine whether China fully implemented its Phase One commitments. Beijing has offered little beyond general statements: officials said the deal was being implemented, pointed to COVID and supply-chain shocks, and urged removal of Section 301 tariffs, but no target-versus-actual scorecard has ever been published. For a government that typically supplies its own compliance narrative, this silence is notable and it now returns to haunt China as Washington reviews outcomes.
We wonder what, if anything, Liu He’s summer meeting with a U.S.–China Business Council delegation in Beijing signals, given his personal involvement in Phase One.
The U.S.–China meeting in Kuala Lumpur on October 26 resulted in a preliminary, non-binding understanding ahead of a leaders’ meeting. Discussions included a potential extension of the tariff truce beyond Nov. 10, with no specifics, and a possible Xi–Trump meeting signaled by the United States but not confirmed by China at the time of writing. The outcome aligns with the prediction jointly agreed by Bishop and guest Chris Johnson on Bishop’s latest live talk.
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