China Accuses G20 of Protectionism as Trade Tensions Escalate Over Its Export Surge

China has accused other G20 economies of using concerns over trade imbalances and industrial overcapacity to justify protectionist measures, escalating a dispute over Beijing's growing export dominance as the United States and Europe push for greater access to the Chinese market.

The confrontation followed comments by U.S. Treasury Secretary Scott Bessent on Tuesday that 19 of the G20 members had agreed to address what he described as an "unsustainable equilibrium" created by a "stream of cheap exports." China was the only member to dissent from a joint statement because of references to economic "imbalances."

China's Commerce Ministry rejected the criticism on Thursday, noting that the growing focus on overcapacity and trade imbalances was being used as a pretext to restrict Chinese companies.

"China believes that taking advantage of the G20 and other multilateral mechanisms to hype up so-called 'economic imbalances' and 'overcapacity' is essentially promoting protectionism," Commerce Ministry spokesperson Ling Huang said at a weekly press conference.

"China is firmly opposed," she said. "This will only disrupt the global economic and trade order, and harm the healthy development of the global economy."

The dispute has added to the widening fault line in the global trading system. The U.S. and European governments have been warning that China's vast manufacturing capacity, government support for strategic industries and weak domestic demand are generating exports at prices that put pressure on producers abroad.

Beijing, however, has consistently rejected claims that its exports are driven primarily by excess capacity or unfair state support. Chinese officials say that the country's industrial competitiveness is the result of investment, technological development and supply-chain efficiency, and that foreign governments are seeking to protect domestic industries from Chinese competition.

The disagreement is emerging as China faces pressure on multiple trade fronts and as a series of diplomatic and economic meetings fuel anticipation of Chinese President Xi Jinping's expected trip to Washington later this month.

Iran Sanctions Add Another U.S.-China Flashpoint

The trade dispute is also unfolding alongside a separate confrontation over U.S. sanctions related to Iran. Asked by CNBC about the latest U.S. sanctions targeting Iran, Huang called on Washington to reverse what Beijing considers unlawful measures and remove sanctions imposed on Chinese companies and citizens.

"Despite repeated requests from China, the U.S. has used Iran as an excuse for repeatedly imposing sanctions on Chinese companies and citizens, to which China is strongly dissatisfied and firmly opposes," Huang said.

Bessent announced early last week that entities, including Chinese banks, that facilitate money laundering or sanctions evasion on behalf of Iran could be cut off from the U.S. financial system.

The threat is significant because access to the U.S.-dominated financial system remains a critical pressure point for Chinese financial institutions with international operations. Any escalation could therefore extend the bilateral dispute beyond tariffs and industrial policy into banking and cross-border finance.

France Becomes Latest Target of Beijing's Trade Warnings

China also criticized France over a new law intended to curb the low prices charged by Chinese e-commerce companies such as Temu.

Huang urged Paris to halt implementation of the measure and warned that Beijing could retaliate if France proceeded.

"If France persists in its course of action, China will take necessary measures to safeguard the legitimate rights and interests of Chinese enterprises, and France will bear all consequences," she said.

The warning adds another layer to the difficult relations between Beijing and European capitals. European governments have sought to reduce their dependence on China in strategic industries while simultaneously attempting to address a rapidly widening trade imbalance.

The European Union and China have been engaged in trade discussions throughout the summer, with Brussels seeking progress toward reducing its record trade deficit with Beijing by October.

EU Trade Commissioner Maroš Šef?ovi? said in an interview with Euronews this week that China would need to produce "concrete results" by October or face "harsher measures."

Huang said China remained willing to work with the European Union but rejected what Beijing views as unilateral demands. China, she said, is prepared to cooperate with the EU, but "demands should not be made unilaterally, and threats should not be made to close markets."

At the heart of the dispute is China's transformation into a manufacturing and export powerhouse at a time when demand inside the country has struggled to absorb its industrial output.

Chinese manufacturers have become competitive across sectors including electric vehicles, batteries, solar equipment, machinery and consumer goods. Their ability to produce at scale and sell into overseas markets has generated significant export growth, but it has also triggered defensive measures from trading partners.

The concern is about the effect of China's industrial model on their own manufacturing bases in the U.S. and Europe. For Beijing, restrictions on Chinese products threaten the export markets that have become an important outlet for its manufacturing sector.

That backdrop creates a difficult policy dilemma for both sides. China needs access to overseas markets as it seeks to sustain growth and support manufacturers, while its trading partners want to prevent a flood of low-priced imports from weakening domestic producers.

China's rejection of the G20 language indicates little appetite in Beijing to accept international pressure framed around "imbalances" or "overcapacity." At the same time, the growing number of trade restrictions and warnings from the U.S. and Europe suggests that the issue is unlikely to disappear through diplomatic negotiations alone.

The risk is that the disagreement could develop into a broader cycle of tariffs and retaliatory measures, fragmenting supply chains and making it harder for multinational companies to operate across the world's two largest economic blocs and their major trading partners.