China exports like a trillion dollars of value more than it imports, and it seems to actively maintain this stance - Does it? And if so, why? My reductive ape-brain says if more goods are leaving your country than coming in, then other countries are accumulating actual goods, and your country is accumulating pieces of paper (or digital bits). Seems like a losing strategy.
Why not just make all the goods that your country wants (especially if you're an enormous country that can scale economies and has access to strategic materials like China) and then you'd have more stuff?
And how do currency exchange markets fit in? I thought exporting and importing and fluctuating value of currencies meant that it should all sort of 'balance out' in the end. Because prices of currencies change the value of export/import and consequently you'd eventually have a country that exports and imports the same value of goods.
Maybe I fundamentally misunderstand the purpose of trade. Or maybe I've been playing too much Victoria 3.
Because you need raw materials to continue your current scale of manufacturing. Resource exploitation competes with land and labor needed for manufacturing capacity. What's more, resource exploitation has low marginal yield and high external costs, while manufacturing is comparatively higher yielding and cleaner.
So you source materials abroad and import them for cheap, then transform them into high yield exports which you sell at a profit. This nets you a surplus that can be invested at home in higher quality domestic capital as well as beneficial social services like education and health care.
Generally speaking, you want other people trading in your currency in order to increase its demand abroad. This biases trade in your favor, because you can produce currency very cheaply relative to what its traded at. So you print $100 note and buy a lump of iron. Then you transform the iron into nails that sell for $1000, but you demand payment in Domestic Money. This forces foreigners to sell you more of their iron in order to get Domestic Money to pay for your nails.
Why don't foreigners simply produce their own nails? Because you have highly advanced and efficient forms of capital that produce nails incredibly cheaply. This makes them digging for iron a cheaper way of buying nails - short term - than building their own crude smithies.
Don't think of countries as operating with Exports and Imports. Think of them as producing Raw Materials against Finished Goods. The pricing simply becomes the ratio of raw to finished goods that is being exchanged. So, how many pounds of iron get you how many pounds of nails?
I mean, its complicated. At a superficial level, the purpose of trade is to simply acquire at a lower price abroad what would be a high price locally. So, an iron miner can dig for iron more easily than they can turn iron into nails. And a nail smith can forge nails more easily than they can dig for iron.
But there's also a foreign policy angle to trade, wherein certain jobs are more desirable than others. Iron mining has a host of social costs internalized by the industry that smelting and forging doesn't. So you're better off making nails than digging for iron. Gearing your economy towards exports means establishing competitive capital such that you can employ more of your people in the higher quality jobs. And by having exclusive domain over capital, you can start dictating terms to the folks in the lower-end professions. You set up a virtuous (for you, vicious for your trade partners) cycle in which you keep more and more of the surplus value of trade in each exchange of iron for nails.
This plays into the great geopolitical game of commerce, in which industrial nations have a financial incentive to keep unindustrialized nations in the dark on technology, in order to keep them churning out cheap raw materials.