In a new FT audio interview, Soumaya Keynes talks with Council on Foreign Relations senior fellow Brad Setser about China’s persistent trade surplus and the potential impact of soaring oil prices. Beijing remains the world’s top exporter of manufactured goods, yet it imports more oil than it sells, creating a structural imbalance that pressures European manufacturers and could reshape global supply chains.

Higher crude costs could shave a few percentage points off China’s export‑driven growth, nudging its surplus lower while boosting the trade balances of oil‑importing regions. Setser warns that the headline figure may mask deeper distortions: Chinese firms benefit from subsidised energy, and Europe’s auto and chemical sectors face cheaper Chinese competition, widening their deficit gaps, and may force a re‑evaluation of tariff policies.

For policymakers, the conversation suggests a two‑pronged response: diversify energy supplies to blunt oil price swings and negotiate fairer trade rules that address subsidised pricing. European leaders, in particular, might consider strategic investments in green technologies to offset cheap imports. The episode argues that oil price shocks alone will not resolve the underlying trade imbalance, while reinforcing the urgency of coordinated fiscal and industrial strategies.