China’s $1.2 Trillion Trade Surplus Is Absolutely Fake — And the Numbers Give It Away.
Let’s start with the basic contradiction.
The U.S. imposed 27.5%–47.5% tariffs on Chinese goods during the tariff war. As a result, China’s exports to the U.S. fell nearly 20% in 2025. That’s confirmed by China’s own customs data.
And yet, Beijing claims that overall exports still grew 5.4% and produced a record-breaking $1 trillion surplus.
That alone should raise eyebrows.
Then came the leaks.
After customs announced the “historic surplus,” Chinese media began reporting widespread export fraud across multiple provinces. Shell companies were created solely to purchase fake export data from customs brokers. These fake numbers were then used to claim local government export subsidies.
Even worse?
Local governments weren’t just tolerating this — they were encouraging it.
Why?
Because Beijing demanded that provinces “stabilize exports” at all costs. And when real exports slowed under tariffs, the only way to hit targets was to manufacture numbers.
In many regions, the incentives were explicit:
export $1 → get ¥0.03 in subsidies.
Export $100 million → collect ¥3 million.
No real goods required.
In August alone, Shenzhen uncovered a single fraud case involving ¥29 million in fake export rewards. And that was just one city.
This matters because fake exports don’t just pad statistics, they distort GDP, drain fiscal resources, and mislead policymakers.
But the biggest red flag came from the money itself.
According to basic economics, a $1.2 trillion trade surplus means $1.2 trillion in foreign currency flowing into China. That money should appear somewhere:
• Central bank reserves
• Commercial bank FX deposits
• Higher imports
• Rising overseas investment
• Inflationary pressure
Instead, China saw:
• Deflation
• Weak consumption
• Stagnant imports
• No surge in FX reserves
In fact, official central bank data shows that foreign currency deposits rose by only ~$200 billion — nowhere near $1.2 trillion.
So where did the money go?
The uncomfortable answer: it never existed.
This isn’t a new concern. Back in 2024, the U.S. Treasury publicly questioned the widening gap between China’s customs data and the figures reported by China’s own foreign exchange regulator. In 2023 alone, customs overstated the surplus by $230 billion — more than 1% of GDP.
Historically, that gap averaged just $7 billion.
That’s blatant fabrication, not merely a rounding error.
Put simply:
China’s real 2025 trade surplus was likely around $200 billion, not $1.2 trillion.
The rest was statistical theater.
Why does this matter?
Because when a government feels compelled to inflate numbers fivefold to maintain confidence, it signals not strength but stress.
And once trust in official data collapses, everything priced off that data collapses with it.
https://x.com/Ken_LoveTW/status/2011651831576084811
A New ‘El Chapo’ Emerges in Sinaloa
https://english.elpais.com/international/2026-01-12/a-new-el-chapo-emerges-in-sinaloa.html
Excerpt:
Mexican authorities point to the growing influence of Fausto Isidro, once a mid-level regional crime boss, in drug trafficking to the United States
The dust has settled from the latest war within the Sinaloa Cartel, revealing the shape of what remains of the surviving criminal structures after 15 months of fighting. The infighting between factions has left the main ones battered, especially Los Chapitos, commanded by the sons of Joaquín “El Chapo” Guzmán, the old regional drug lord. Of the four sons, only two remain at large, living on the run and stripped of their key lieutenants, who have either been killed or captured. Their enemies — the sons and followers of their father’s former partner, Ismael “El Mayo” Zambada — have emerged stronger from the war. But the biggest victory in all this violent chaos belongs to neither faction.
A new “Chapo” is emerging in Sinaloa, less media-savvy than his predecessor, but just as capable of exporting drugs north. Security sources consulted by EL PAÍS indicate that the main beneficiary of the cartel war is, beyond a doubt, the group led by Fausto Isidro Meza Flores, alias “El Chapo” Isidro. One of the U.S. government’s biggest enemies, Meza Flores runs a major operation producing and trafficking synthetic drugs, fentanyl, and methamphetamine, primarily in northern Sinaloa, especially in Los Mochis and Guasave. “He exports more drugs than everyone else,” one of the sources asserts. “He’s the big winner of the war; he’s very powerful,” the same source adds, a surprising statement given the events of December.
In the final weeks of last year, Mexican authorities virtually wiped out one of the pillars of El Chapo Isidro’s faction, the Inzunza family. On December 1, marines killed the son, Pedro Inzunza Coronel, alias “El Pichón,” in Choix, a small municipality inland from the coastal city of Los Mochis. “[El Pichón] started shooting at the Navy helicopter, and they returned fire,” a source familiar with the federal security cabinet meetings noted. Several other arrests were also made in that operation. On New Year’s Eve, the National Guard arrested the father, Pedro Inzunza Noriega, alias “Sagitario,” 62, in Culiacán, the state capital. Unlike the previous arrest, this one was made without a single shot being fired.
One would think that the downfall of the Noriegas, the first criminals accused of narco-terrorism by the U.S., had dealt a significant blow to El Chapo Isidro’s group. The Trump administration, in fact, considered the Noriegas to be the leaders of the faction. In a statement released in May, the U.S. Department of Justice placed them at the head of the “Beltrán Leyva organization,” named after the family that founded the faction more than 20 years ago, now fallen from grace, with the Beltrán Leyva brothers either dead or in prison. “This organization, under the leadership of Inzunza Noriega, is allegedly responsible for some of the largest seizures of fentanyl and cocaine destined for the United States in history,” said the FBI agent in charge of the Noriega investigation at the time.
In Mexico, the interpretation is different. To begin with, authorities place El Chapo Isidro at the head of the faction, even above the son of Alfredo Beltrán Leyva, one of the founding brothers, who is serving a sentence in the United States. This son, Jesús Alfredo Beltrán, alias “El Mochomito,” is another target of the Trump administration, although not at the level of El Chapo Isidro, who a few months ago was added to the FBI’s list of the 10 most wanted fugitives. To give an idea of the scale of the new Chapo’s operation, one of the sources consulted stated: “I wouldn’t say that [the fall of the Noriega brothers] affected his operation. If anything, it was a blow to his morale.”
.....Once in Sinaloa, El Chapo Isidro grew up in the criminal corridor along the northern coast, between Los Mochis and Guasave, where authorities made the largest fentanyl seizure in the country’s recent history: over a ton, in December 2024. He rose to power under the wing of his uncles, Agustín and Salomé Flores Apodaca. After the former’s arrest in 2012 and subsequent extradition, El Chapo Isidro took command of the faction. “He inherited the entire Beltrán Leyva business, overseeing Guasave and the surrounding mountains, all the way to León Fonseca and Sinaloa de Leyva,” says the Sinaloa security forces agent.
From 2011 to 2020, Mexican authorities arrested him at least four times, according to Cenapi’s records, for serious crimes such as organized crime, drug trafficking, kidnapping, and weapons possession. For some reason, none of these resulted in him being imprisoned. The Mexico Attorney General’s Office has at least 15 open investigations against him. In the United States, the U.S. Attorney’s Offices in Southern California and the District of Columbia filed separate indictments against him for conspiring to traffic cocaine, methamphetamine, and heroin into the country, and for using weapons in that conspiracy. But, for now, he remains a target