ABOUT THAT RECORD CHINESE TRADE SURPLUS: It might be entirely BS.

After customs announced the “historic surplus,” Chinese media began reporting widespread export fraud across multiple provinces. Shell companies were created solely to purchase fake export data from customs brokers. These fake numbers were then used to claim local government export subsidies.

Even worse?

Local governments weren’t just tolerating this — they were encouraging it.

Why?

Because Beijing demanded that provinces “stabilize exports” at all costs. And when real exports slowed under tariffs, the only way to hit targets was to manufacture numbers.

In many regions, the incentives were explicit: export $1 → get ¥0.03 in subsidies.

Export $100 million → collect ¥3 million. No real goods required.

More:

According to basic economics, a $1.2 trillion trade surplus means $1.2 trillion in foreign currency flowing into China. That money should appear somewhere:

• Central bank reserves
• Commercial bank FX deposits
• Higher imports
• Rising overseas investment
• Inflationary pressure

Instead, China saw:

• Deflation
• Weak consumption
• Stagnant imports
• No surge in FX reserves

In fact, official central bank data shows that foreign currency deposits rose by only ~$200 billion — nowhere near $1.2 trillion.

So where did the money go?

The uncomfortable answer: it never existed.

Full report on X.

China’s official import/export figures have been largely reliable (grading on the Communist curve, of course), but Grok had this to add: “The official Chinese data reports a record $1.19T trade surplus for 2025, with exports up 5.5% despite a ~19% drop to the US. However, analysts note discrepancies: FX reserves rose only ~$156B, not matching the surplus, possibly due to outflows. Reports from Chinese media and investigations reveal export data fraud via shell companies to claim subsidies, inflating figures. While not proven widespread, this raises questions about accuracy. Sources: Reuters, SAFE, SCMP.”

Stay tuned.