[Beijing = E-Daily Lee Myeongcheol Correspondent] China, which has sustained export growth thanks to the artificial intelligence (AI) boom, has achieved a trade surplus of $100 million for the second consecutive year. Some observers point out that China’s trade surplus is due to efforts to curb the appreciation of the yuan. While China refutes these allegations and promotes proactive import and openness policies, international trade friction appears inevitable.

According to China’s state-run Xinhua News Agency on the 11th, the China International Import Expo (CIIE) concluded the previous day in Shanghai.

The CIIE, one of China’s largest import expos, ran from the 5th and recorded a provisional transaction volume of $85.45 billion (approximately 114 trillion won) during the event. This represents a 2.3% increase from last year and marks the largest volume in the event’s history.

A total of 4,142 overseas companies participated in this year’s CIIE. Among them, about 300 were major corporations listed on the Fortune 500. The number of registered visitors exceeded 470,000, an increase from last year.

In China, the CIIE’s success is interpreted as proof that trade centered on China is thriving. Xinhua News Agency reported, “The reason overseas companies are flocking to China is because it offers a massive market and substantial purchasing power.”

China’s emphasis on the importance of trade is also linked to its recently rising trade surplus. According to the General Administration of Customs of China, China’s merchandise trade surplus (in U.S. dollars) from January through October of this year was approximately $1.0426 trillion (about 1,394 trillion won), an 8.0% increase compared to the same period last year.

China surpassed a $1 trillion trade surplus last November, but achieved the same milestone in just 10 months this year. There are also forecasts that this year’s trade surplus will exceed last year’s record high of $1.189 trillion.

The United States and the EU have long pointed out that China’s yuan policy has had a positive impact on exports. They argue that by suppressing the appreciation of the yuan, Chinese authorities are enhancing price competitiveness in exports. The International Monetary Fund (IMF) also analyzed in a report earlier this year that the Chinese yuan was undervalued relative to the country’s economic strength.

In response, the People’s Bank of China countered last month, stating, “China’s strong export performance stems from improvements in its own industrial competitiveness, not from exchange rate policy, and we have neither the intention nor the need to secure a competitive advantage through currency devaluation.”

Despite China’s denials, the controversy surrounding China’s growing trade surplus and its exchange rate is likely to persist. The Hong Kong-based South China Morning Post (SCMP) reported earlier this month that EU economic officials are scheduled to visit China to meet with the governor of the People’s Bank of China and the Minister of Finance to discuss exchange rate and trade imbalance issues.

The SCMP reported, “Because the value of the Chinese yuan is not determined entirely by market principles, trading partners have been raising suspicions about yuan devaluation for decades,” adding, “The EU argues that the yuan’s undervaluation makes Chinese products cheaper, thereby exacerbating a ‘second China shock.’”

This could also trigger tensions with the United States, China’s largest trading partner. In particular, economic and trade issues are expected to be discussed at the U.S.-China summit scheduled to take place next week on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Shenzhen, China.

Reuters noted, “China is increasingly relying on overseas demand to prop up its economy, which is suffering from sluggish consumption and a prolonged real estate slump,” adding, “As dependence on external markets grows, China becomes more vulnerable to protectionist measures abroad and may be masking persistent domestic weakness.”

However, within China, officials explain that the trade surplus is driven by export diversification and improved product competitiveness.

China’s state-run Global Times (GT) reported that China’s trade relationships are becoming increasingly diversified, noting that trade volume with ASEAN (Association of Southeast Asian Nations)—China’s largest trading partner—from January through October of this year (7.68 trillion yuan) increased by 24.2% year-over-year, while trade with the European Union (EU) also rose by 8.5%.

Citing experts, the GT also emphasized that “as China’s vast manufacturing system continues to advance, its fundamental competitiveness is taking root,” adding that it is “seizing opportunities arising from global technological changes while providing new demand and business opportunities to its international trading partners.”