The Weekly Briefing from Capital Economics Neil Shearing on China’s trillion dollar surplus; Leah Fahy on China's AI race
Jan 16, 2026
Neil Shearing, Group Chief Economist at Capital Economics, discusses China's staggering $1.2 trillion trade surplus and its implications for global economies. He highlights how China's policies squeeze European exporters and impact emerging markets differently. Leah Fahy, a China Economist, explores the AI race, contrasting China's strategies and challenges against those of the US. Her insights reveal how China's push for self-sufficiency in AI is influenced by chip shortages and energy expansion, changing global tech dynamics and geopolitical stakes.
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Trillion-Dollar Surplus Undermines China's Stewardship
- China's $1.2tn trade surplus reveals growing global trade imbalances that threaten developed and emerging economies.
- Neil Shearing says this surplus undermines Beijing's claim to be a responsible global stakeholder.
Three Ways Countries Experience China's Rise
- Different countries feel China's rise differently: high-income exporters face high-end competition while some EMs gain from supply-chain shifts.
- Neil Shearing classifies three country buckets with distinct exposures to China's industrial policy.
Cheaper Chinese Goods Trim Inflation Modestly
- China's cheaper export prices have shaved roughly 0.1–0.2 percentage points off annual CPI in advanced economies.
- Neil Shearing cautions this is helpful but not the dominant driver of DM disinflation in 2026.