A ballooning trade surplus will certainly add to the tensions between China and its major trade partners. But it is not a result of protectionism. Instead, it stems from China embracing economic globalization, expediting specification across borders in line with each country's comparative advantages.

As the most populous country in the world, China benefited hugely from its competitive labour cost during its rise as a global manufacturing power. And so far, most Chinese exports are from the processing trade.

By adding value to materials or components that they process with cheap labour, Chinese export businesses make profits, no matter how thin their margins might be.

Hence, until the country's labour cost rises considerably, foreign companies will find China an ideal place for manufacturing. In fact, the huge inflow of foreign investment in recent years bears full testimony to China's appeal as a cost-cutting manufacturing base.

This structural change in the division of labour across the globe cannot be dealt with using instant cures. It requires long-term efforts to adapt industries in China and other countries to the new economic landscape.

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