UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'One trillion dollars'
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Dec 8, 2025 China's trade surplus soared past one trillion dollars, bolstering its growth ambitions amidst weaker domestic demand. Despite US tariffs, China's exports have shown resilience for several key reasons. Meanwhile, Germany surprised analysts with stronger industrial production, even as sentiment data lagged behind. Additionally, the podcast explores the current silence from the Fed and the intriguing developments around the Bank of England, highlighting the contrasting landscapes of manufacturing activity and sentiment.
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China's Surplus Masks Weak Domestic Demand
- China's trade surplus exceeded $1 trillion in the first 11 months, reflecting a meaningful trend rather than a symbolic round number.
- Paul Donovan says this surplus helps offset weak domestic demand and supports meeting official growth targets.
Why Exports Keep Growing Despite US Tariffs
- Multiple factors explain the rising surplus despite US tariffs, including rerouting and uninterrupted trade with other countries.
- Donovan highlights non-US consumer resilience and lack of substitutes as key drivers sustaining exports.
Five Reasons US Pressure Fell Short
- Five factors: cooperation outside the US, the US's limited economic weight, rerouting around tariffs, irreplaceable products, and strong non-US consumer demand.
- These combined explain why US trade pressure hasn't significantly dented China's surplus, Donovan argues.