Global Economic Imbalance Nears Critical Point: Why the G7 Is Sounding the Alarm

Systemic Imbalances: Roots and Risks of Global Disequilibrium

In June 2026, France, as G7 chair, pushed global economic imbalances to the core agenda of the summit. French President Macron bluntly stated that the current mismatch between trade and capital flows is "unsustainable," with the underlying logic being that the post-pandemic redistribution mechanism of global savings and consumption is heading toward extremes. The three major economic engines—China, the United States, and Europe—are each trapped in structural imbalances, lacking effective multilateral coordination tools.

China: Record Surplus Driven by Overcapacity

China's current account surplus reached a historic peak of $735 billion in 2025, far exceeding levels of the mid-2010s. The immediate driver of the surplus expansion is the sustained boom in exports, while weak domestic demand and large-scale government subsidies form the deeper soil. Despite high U.S. tariffs, Chinese manufacturing maintains global competitiveness through price advantages and policy support. Critics point out that an undervalued renminbi further amplifies export advantages. Beijing denies distorting trade, but G7 finance ministers believe that without cooperative rebalancing, protectionism will inevitably escalate.

United States: Structural Dependence on Consumption Addiction and Fiscal Deficits

The U.S. current account deficit stands at about 2.4% of GDP (Q4 2025), behind which lies robust household consumption supported by long-term loose fiscal policies. Multiple rounds of tax cuts, pandemic stimulus, and persistent federal deficits make the U.S. economy highly reliant on foreign capital inflows to fill the savings gap. While this model sustains global effective demand, it also creates systemic vulnerabilities: once capital flows reverse, the dollar exchange rate and interest rates could fluctuate sharply. The Trump administration frequently used tariff tools to try to reduce the deficit, but structural adjustments remain far from complete.

Europe: Surplus Not a Sign of Prosperity, but a Mirror of Absent Investment

Unlike China, the euro area's current account surplus stems not from excess export competitiveness, but from low investment and high savings. Former ECB President Draghi warned in a 2024 report that if Europe cannot effectively convert household savings into productive investment, it will fail to catch up with the U.S. and China. Since the pandemic, investment growth in the euro area has lagged significantly behind that of the United States, especially in the technology sector. Economists point out that underinvestment suppresses domestic demand, causing excess savings to flow abroad and pushing up the regional surplus.

Risks of Coordination and the Peril of Disorderly Unwinding

G7 finance ministers agreed in May 2026 that the three major imbalances must be addressed through coordinated policies, otherwise they could force a clearing via financial crisis. Historical experience shows that global current account rebalancing is often accompanied by exchange rate shocks, rising trade barriers, and asset price collapses. Currently, multilateral coordination mechanisms—especially the G20—are no longer effective. France is trying to build consensus within the G7 framework, but the rivalry between the U.S. and China, as well as internal divisions within Europe, make substantive action difficult.

Conclusion: The End of Imbalances is RestructuringGlobal economic imbalances are not a new phenomenon, but the current scale and divergence have reached historic highs since the post-Bretton Woods era. Whether China can shift to domestic demand-driven growth, the United States can restore fiscal discipline, and Europe can activate investment—these three questions will determine the global growth model for the next decade. Without coordination, zero-sum trade conflicts and financial risks will become increasingly normalized. The G7's concerns serve as a warning of the disintegration of the old order: the end of imbalances will either be orderly adjustment through cooperation or crisis-driven systemic restructuring.