China’s Consumption Slump Fuels Global Trade Debate

China’s household spending has slowed dramatically, with disposable-income growth falling to 4.3 % in 2025—only slightly above the United States’ 3.8 % rate. The slowdown comes as the country’s export sector remains robust, driven in part by a surge in air-conditioning unit shipments to Europe that rose more than 40 % during a recent heat wave, according to state media. Despite this export strength, the trade surplus has not narrowed meaningfully.

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From 2003 to 2020, urban Chinese consumers enjoyed annual disposable-income gains of roughly 10 % or higher, far outpacing the U.S. average of 3 %. The pace has since retreated sharply. Macquarie analyst Larry Hu attributes much of the decline to a steep fall in home prices: since their 2021 peak, values have dropped to 2016 levels, erasing about 85 % of the gains made between 2012 and 2021. Hu notes that the housing market’s outlook is increasingly tied to export performance, warning that a bottom may be reached when policymakers can no longer rely on exports to sustain growth.

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China’s imports surged in June at the fastest pace in five years, while export growth in June hit its sharpest increase since 2021 and exceeded forecasts in July. A China-Africa liner carrying 23,800 tons of mechanical equipment and engineering vehicles departed Yantai Port for Ghana on September 3 2026, illustrating the continued flow of Chinese manufactured goods abroad.

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Beijing lodged an objection to that paragraph and three others, standing as the sole dissenting G20 member. U.S. Treasury Secretary Scott Bessent criticized the objection, emphasizing the need for reforms to boost internal demand.

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Former Bank of China chief researcher Zong Liang said China did not deliberately engineer the export surge and cautioned that announced policies to stimulate domestic demand may require up to five years to bear fruit. He highlighted the challenge of raising household incomes, noting the stark disparity in average personal wealth—about $66,871 in the United States versus $6,463 in China, according to Wind data. The combination of sluggish consumption and export-driven growth continues to shape both domestic policy debates and international trade discussions.

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