China Targets Domestic Demand; Trade Surplus Tops $1 Tln

US-China Trade Dynamics - Chinese companies still rely on the American market, despite double-digit falls in exports to the US over the past eight months [2][3] - China's exports to the US are being rerouted through third countries like Vietnam, Thailand, Malaysia, Philippines, Indonesia, and Mexico [3] - If Chinese companies completely lost access to the American market, their profits would significantly decrease [4] China's Economic Strategy - China is diversifying its trade relationships, indicating that the US is not the only market for Chinese goods [4] - The primary focus is on the weakness of Chinese domestic demand and the country's increasing ability to meet its own needs domestically [5] - The Politburo has decided to prioritize boosting domestic demand in 2026 [6] Stimulus and Import Reliance - The expected stimulus is not very large, limiting its impact [8] - Chinese companies are increasingly capable of filling domestic demand gaps, reducing reliance on imports [8][9] - China is less reliant on imports than ever before, diminishing the flow-through effects of domestic rebalancing to foreign countries compared to the 2008 stimulus [9][10]