China's massive current account surplus, officially reported at 3.7 per cent of GDP in 2025, represents a festering macroeconomic challenge that transcends typical trade negotiations. The manufacturing surplus exceeds 10 per cent of GDP—larger than any nation has recorded in over seven decades—creating global economic stress and fueling protectionism worldwide.

The renminbi faces an estimated 20 per cent undervaluation when applying China's own IMF current account norms. Real exchange rates weakened substantially between early 2022 and mid-2025, and while modest appreciation has occurred recently, it remains insufficient to address accumulated imbalances. China's growth model, which suppresses consumption through high savings and state-dominated finance, relies heavily on undervalued exports to drive growth.

The Trump Administration has largely ignored currency valuation in favor of tariffs and managed trade deals, with exchange rates notably absent from recent US-China summits. This approach fails to address root causes of global imbalances, requiring coordinated pressure from the US, Europe, and IMF to push meaningful renminbi appreciation.

Without confronting the undervalued currency directly, managed trade agreements will prove inadequate for rebalancing global commerce. The silence from Western policymakers on this critical issue undermines efforts to address China's export-driven growth model that continues flooding global markets with excess manufacturing capacity.