China: Trade imbalances and weak demand – Rabobank

China faces mounting pressure on its trade model due to US-led restrictions and weak domestic demand, according to Rabobank strategists. The country's large trade surplus and lackluster economic growth target are being threatened by policy barriers that hinder its ability to rely on exports. The official Purchasing Managers Index (PMI) shows mixed signals, with improvement in manufacturing but deterioration in non-manufacturing sectors.

Despite this, unofficial data suggests China's manufacturing sector is expanding at a faster rate than expected. If accurate, China's surplus must still be absorbed by demand elsewhere, intensifying the problem. The EU must address its trade deficit with China through regulatory measures, as Ursula von der Leyen stated. In the meantime, the US dollar's strength and geopolitical uncertainty weigh on global markets, with gold, Bitcoin, and economic indicators like the UK bond yields showing negative movements.