Different month, same contrast.

The much-discussed divergence between China’s outbound shipments and imports was on full display in trade data released Tuesday. Exports grew 8.7% in August, the Party said. That was the briskest YoY pace in 17 months.

The value of those shipments was about $310 billion, the most in nearly two years, and not too far off the all-time high set towards the end of 2021. The figures easily topped estimates.

By contrast, imports barely grew at all, posting a decidedly tepid 0.5% gain, just a fourth of the 2% increase consensus expected.

That disparity — between robust exports and listless imports — is a point of friction between Beijing and the West. Indeed, it’s a geopolitical fault line by now.

The strategy isn’t new. And that’s precisely the problem. Everyone’s apprised of what’s going on here. Xi’s running China’s factories way out ahead of domestic demand and he’s foisting the resultant overcapacity on the rest of the world and calling that “growth.”

Advanced economies have seen this movie before, and they know how it ends: In de-industrialization and blue collar disaffection at home, which in turn fosters socioeconomic angst to the detriment of the political center.

To be sure, this is suboptimal for China too. As a rule of thumb, an autocracy’s legitimacy waxes and wanes in proportion to the economic gains that accrue to the oppressed masses. The figure below serves as a poignant reminder of why the Chinese countenance one-party rule.

Extreme poverty was eradicated. Of course, extreme poverty’s a kind of bare minimum standard for quality of life. For the tenuous social contract between an autocracy and the populace to hold, the government has to provide for ongoing quality-of-life gains. Or else risk an illegitimacy crisis.

The “easy” part’s over in China. The next step — building a prosperous middle class and working towards a better balance between the old smokestack economy and a consumption-driven growth model — goes through market-driven reforms and social liberalization.

That doesn’t mean China has to stop being China. It can be capitalism with “Chinese characteristics.” And civil liberties with the caveat that you’ll be summarily executed for exercising them “wrong,” if readers will forgive the gallows humor. That’s where the country was headed until 2013. Under Xi, China’s regressing on those fronts and lying about it. It’s a great leap backwards.

In public, particularly when putting international audiences to sleep with his famous monotone on the (increasingly rare) occasions he decides to dignify a forum or a summit with his imperial presence, Xi drones on endlessly about “opening up.” Behind the scenes it’s a different story entirely: The Party’s becoming more insular all the time. Policymaking’s always been — and likely always will be — a black box in China. “Standing Committee analyst” won’t ever be a viable profession. But policy machinations in Beijing needn’t be completely opaque, as they are under Xi post-coronation at the 20th Party congress.

That lack of visibility — and the perception of capriciousness — casts a pall over the populace. Xi talks about “common prosperity,” and yet based on what little information the outside world has about consumer sentiment in China, households are more anxious about the future than at any point in a generation. How would you feel waking up every day knowing that your prospects, and those of your family, depend entirely on the whims of a man who exalts Mao Zedong, one of modern history’s worst people, as a paragon of virtue and a role model for children?

To reiterate: An autocracy that loses its claim on legitimacy with the people quickly — and necessarily — becomes a dictatorship. Oppression turns to outright tyranny. That’s where China is today.

Coming back to the trade figures, the solution if you’re the Party is to rescue domestic demand. They need to revive the consumer spending impulse. But Beijing pretty plainly doesn’t have any good ideas about how to accomplish that. Frankly, I don’t blame them on that score. Everyone (present company included) shouts “fiscal! fiscal! fiscal!” without specifying what that means in the Chinese context. The government has taken steps (a series of steps) to rescue the ailing property market Xi intentionally torpedoed, but nothing’s worked so far.

As I mentioned earlier this week, it’s not immediately obvious how effective “helicopter” money would be in China. Do they have the financial infrastructure to expeditiously get, let’s call it CNY6,000, in free money to households? Some households, sure. Most households, maybe. But this is a country with 1.4 billion people, not all of whom are consumption-minded urbanites.

Let’s assume, for argument’s sake, that you can get stimulus “checks” to a majority of households somehow. How much of that yuan gets spent on goods and services that would show up as “retail sales” or even be counted towards some nebulous aggregate called “domestic demand,” a concept every analyst claims to understand, but no analyst can delineate precisely? Are Chinese farmers going to buy, with their stimulus money, a new Huawei trifold phone? Or are they going to buy 50 packets of seeds, three-dozen live chickens and — I don’t know what Chinese farmers buy — a used rug from a neighbor? How would helicopter money actually work in practice outside of the cities?

Part of China’s incurable penchant for leaning on its factories to rescue growth by engineering exportable overcapacity is attributable, in my view, to a dearth of better ideas. Of course, one way to revive consumer sentiment would be to indicate to the masses that the government intends to a loosen things up — all things. The economy, the police state, the enforcement of social mores and so on. But we all know that isn’t going to happen. So, expect households to remain reticent, and the spending and borrowing impulse commensurately moribund.

The export gambit isn’t going to work out for Xi. President Trump or no President Trump, the tariff wars are going to continue, and Xi can’t win them. Even if the geopolitical environment improves, the global growth outlook — and particularly the growth outlook for advanced economies — is softening, which means less external demand.

Oh, well. If all else fails, Xi can always just ship more dual-use technology to Moscow’s war machine. And there should be ample demand for Chinese farm exports in North Korea, where Xi’s other “strategic partner” presides over a man-made, rolling famine.