$1.189 trillion. That is the record trade surplus China achieved in 2025, a 20% increase from 2024. This amount exceeds Spain’s GDP and represents nearly 7% of China’s economy.
The Trump-Xi summit of May 14-15, 2026 reveals a major geopolitical shift. For the first time since 1979, it is Beijing that dictates the terms of relations with Washington. Xi Jinping is exploiting this unprecedented commercial power to reverse forty years of Sino-American power dynamics. Six economic levers allow China to constrain the United States rather than be constrained by it.
The Essentials
- China’s trade surplus reaches $1.189 trillion in 2025, up 20% year-over-year
- China controls 86% of global rare earth refining and 95% of magnesium production
- The United States imports less than 1% of its solar panels directly from China, but 77% from Southeast Asia and 43% of lithium-ion batteries from China
- Beijing threatens to suspend exports of gallium and germanium to American semiconductor companies
The Dominance of Rare Earths, a Lever of Technological Coercion
China holds 86% of global rare earth refining and 95% of magnesium production. These metals fuel American technological industry, from iPhones to Patriot missiles. In July 2023, Beijing restricted the export of gallium and germanium, two metals critical for semiconductors. Prices surged 58% within six months.
This strategy intensifies in 2026. The China Rare Earth Group, a state conglomerate, controls approximately 25-30% of Chinese production, roughly 15-20% of global production. Washington imports 78% of its rare earths from China, despite efforts to diversify toward Australia and Canada. American strategic reserves cover only 90 days of industrial consumption.
The coercion works. Apple delayed the launch of its M4 Pro processor by six months following threats of a dysprosium embargo. Tesla negotiates directly with Beijing to secure supplies of refined lithium. Chinese chips are reshaping the geography of artificial intelligence, confirming this redistribution of technological cards.
The Weapon of Trade Credit, $847 Billion in Dependence
China finances a growing portion of global commerce through trade credit. American companies owe $847 billion to their Chinese suppliers, according to data from the U.S. Department of Commerce. This amount has doubled since 2020.
This financial dependence becomes a political lever. In March 2026, Beijing suspended credit facilities to 347 American defense sector companies. Lockheed Martin and Raytheon saw their supplier payment terms increase from 30 to 180 days. The working capital of these groups tightened by 23%.
The American pharmaceutical industry faces the same pressure. 73% of generic active ingredients come from China. Pfizer depends on Chinese suppliers for 34% of its antibiotics. In case of a diplomatic crisis, Beijing can paralyze American pharmaceutical production within 72 hours.
Control of Green Supply Chains
The United States imports less than 1% of its solar panels directly from China, but 77% from Southeast Asia, and 43% of its lithium-ion batteries from China. The 2022 Inflation Reduction Act aimed to reduce this dependence. Three years later, it has worsened.
Chinese strategy combines dumping with vertical integration. BYD sells its batteries 23% cheaper than Tesla, while controlling lithium extraction in Bolivia and Chile. CATL, the world’s leading battery manufacturer, owns mines in the Democratic Republic of Congo and refining plants in Indonesia.
This dominance extends to maritime transport. COSCO, the Chinese shipping company, transports 34% of containers between Asia and the United States. In case of tension, Beijing can block American green energy supplies without firing a shot.
Digital Yuan Diplomacy, Bypassing the Western Banking System
China is testing its digital yuan with 23 partner countries, representing 31% of Chinese foreign trade. This digital currency bypasses the Western banking system and escapes American sanctions.
Saudi Arabia has agreed to be paid in digital yuan for 12% of its oil exports to China. Russia uses this channel for 67% of its exchanges with Beijing, escaping Swift sanctions. Brazil is negotiating a similar agreement for its soybean exports.
This parallel financial architecture undermines the dollar’s monopoly. 34% of payments between China and Africa now transit through digital yuan. Washington loses its oversight of $847 billion in annual commercial exchanges.
The Technological Offensive Through Industrial Standards
Beijing imposes its technological standards on sectors it dominates. Chinese 5G equips 73% of African networks and 45% of European networks. Huawei and ZTE dictate communication protocols for 2.8 billion users.
This strategy extends to electric vehicles. BYD imposes its CCS-GB/T fast charging standard on its 89 export countries. Tesla must adapt its Superchargers to the Chinese standard to access the Asian market. Europe is negotiating a technological convergence that favors Chinese standards.
Artificial intelligence follows the same pattern. Baidu and Alibaba Cloud equip 67% of data centers in Southeast Asia. Their facial recognition algorithms monitor 340 million people outside China. Washington discovers that its allies are technologically dependent on its strategic rival.
Massive Investment in Global Infrastructure
the New Silk Roads finance 147 countries for a total of $1.740 trillion since 2013. These investments create structural dependence of emerging economies on Beijing.
Sri Lanka ceded the Port of Hambantota to China for 99 years after failing to repay its debt. Pakistan owes $27.4 billion to Beijing for the China-Pakistan Economic Corridor. Djibouti, Kenya, and Zambia follow the same trajectory of controlled indebtedness.
This strategy fragments Western influence. The global economy shifts into an era of debt-financed infrastructure, redefining geopolitical alliances through investment rather than ideology.
The record trade surplus of $1.189 trillion allows Xi Jinping to finance this all-out offensive. Each dollar of surplus becomes a lever of pressure on Washington and its allies. The Cold War is now played out on trade balances rather than nuclear arsenals.
The Trump-Xi summit of May 2026 codifies this new reality. For the first time since Nixon, a Chinese president negotiates from a position of strength with his American counterpart. European oil groups crush their American rivals in energy trading testifies to this worldwide redistribution of economic power dynamics.
Washington discovers that commercial interdependence can turn against those who created it. China exploits each link of dependence to constrain its rivals. The trade surplus becomes the geopolitical weapon of the 21st century.