China needs to chart a new course to become world’s largest importer

Reprinted from today's SCMP 06/10/2025

In 2009, China surpassed Germany to become the world’s largest exporter of goods, a position it has maintained for the past 16 years. This export dominance has been instrumental in propelling China’s economy forward, enabling it to overtake Japan in 2010 as the second-largest economy in nominal GDP, trailing only the United States.

By 2013, China had also eclipsed the US as the world’s largest trading nation in goods, measured by the combined value of imports and exports. These milestones underscore its remarkable transformation from an inward-focused economy to a global powerhouse.

Now, as China’s leadership prepares to meet from October 20-23 to deliberate on the 15th five-year plan, it is imperative for Beijing to chart a new course: overtaking the US to become the world’s largest importer within the next five to 10 years.

This shift would not only mark a pivotal evolution in China’s economic strategy, it would also carry profound geopolitical and economic implications for the nation, its key trading partners and the rest of the world.

The five-year plan, a legacy of the Soviet-style planned economy, has evolved far beyond its original rigid production targets and ideological framework. Today, it serves as a comprehensive blueprint encompassing economic development, environmental protection, education and social welfare programmes.

The upcoming plan is particularly critical as China aims to achieve its goal of becoming a “modern socialist country”. Central to this ambition is accelerating the transition to a consumption-driven economy, addressing structural imbalances that have long prioritised investment and exports over domestic demand.

During the past four decades of “reform and opening up”, China’s growth has relied heavily on fixed-asset investments, such as infrastructure, real estate and exports. These engines have fuelled unprecedented expansion, but their sustainability has waned in recent years. Fixed-asset investments, particularly in the real estate sector, have lost steam amid overcapacity and debt concerns. While still robust, exports have sparked intensifying frictions with several trading partners.

China’s exports surged in 2024, contributing to a record trade surplus of nearly US$1 trillion. This surplus has drawn sharp criticism, with trading partners arguing that China is effectively exporting its overcapacity and relying on foreign demand to sustain growth, potentially at the expense of jobs and industries abroad.

A stark illustration of this imbalance is China’s steel sector, where production exceeded 1 billion tonnes in 2024, with exports reaching around 110 million tonnes. Such overproduction exemplifies the cutthroat “involution-style” competition plaguing many industries – excessive price wars driven by oversupply and weak domestic demand, resulting in razor-thin margins or losses. This phenomenon extends to exporters, undermining global trade fairness.

Meanwhile, China’s imports grew modestly by 2.3 per cent to about US$2.6 trillion in 2024, compared to US imports of goods and services, which rose 6.6 per cent to a record US$4.1 trillion. At first glance, bridging this gap to surpass the US as the top importer might seem daunting, but it aligns perfectly with China’s pressing need to rebalance its economy.

To facilitate this transition, China must confront deep-rooted challenges, including boosting domestic consumption. Opening up areas such as education, healthcare, sports and elderly care to foreign investment and services could invigorate these industries.

China’s ageing population, projected to see more than 400 million people aged 60 and above by 2035, amplifies the urgency for imported healthcare solutions, including advanced drugs and technologies. Lowering the cost of items such as medications to treat cancer, as Beijing has done in recent years, directly addresses this demand and supports consumption upgrades.

The geopolitical significance of China becoming the largest importer cannot be overstated. Amid escalating trade tensions, exemplified by US President Donald Trump’s imposition of new tariffs on Chinese goods in April, boosting imports would signal China’s commitment to balanced global trade.

The EU and others have echoed concerns over China’s surpluses, viewing them as a threat to their manufacturing bases. By actively expanding imports, Beijing could help ease these frictions, reduce retaliatory measures and enhance its image as a responsible global power.

Furthermore, as Trump has erected tariff barriers against products from most of the world, China’s efforts to boost imports would win more friends. By becoming the world’s largest importer, China would also set global standards and influence supply chains, rules and norms. The move aligns with President Xi Jinping’s repeated assertions that China does not seek deliberate surpluses, as evidenced by initiatives such as the annual China International Import Expo.

Economically, the benefits for China are multifaceted. Boosting imports extends beyond goods to encompass technology, talent and capital inflows, fostering innovation and productivity. Moreover, reducing the country’s reliance on exports by curtailing subsidies and lowering administrative barriers to imports would curb involution at home and abroad. This shift would stimulate domestic demand, creating a virtuous cycle where higher imports fuel consumption, job creation and economic resilience.

In a post-pandemic world, where global supply chains remain fragile, positioning China as the largest importer would integrate it more deeply into these chains, not as a mere supplier but as a key demand driver. As China’s leaders finalise the 15th five-year plan, setting a clear target to become the world’s largest importer is not just ambitious but essential. This would mark a new phase in China’s development, shifting the focus from “made in China” to “consumed in China”.

The path ahead requires bold policy actions – tariff reductions, market openings and consumption incentives – but the rewards for China and the world are immense. Failure to act risks perpetuating imbalances that could hinder long-term prosperity. Now is the time for China to embrace this transformative goal.