The writer is a finance professor at Peking University and a senior fellow at the Carnegie-Tsinghua Center for Global Policy

China reported the largest monthly trade surplus in its history last Friday. At $94.5bn, this was the latest in nearly two years of record monthly surpluses even as Chinese consumption has stagnated.

But while it may seem sheer good luck for China that its soaring trade surpluses came just in time to balance stagnant consumption, this misunderstands the relationship between domestic consumption and trade. Contrary to what many assume, the country’s burgeoning trade surplus is not a symptom of manufacturing prowess, nor is it evidence of a culture of thrift. It is instead a consequence of the great difficulty China has had in rebalancing its domestic economy and reining in its soaring debt.