Everyone talks about the new flood of mainland exports hitting the world's shores, sending China's trade surplus through the roof, wreaking havoc with partner country industrial markets and imposing deflationary pressure on the global economy.

There's just one problem - which is that it's not happening. At the macro level, China's export market share has been surprisingly stable over the past five years, with little sign of a headline "flood". What's going on?

Two things. First, the big macro story is not rising exports but rather falling imports. China's housing collapse has tanked domestic construction and investment demand, and policies aimed at local self-sufficiency have further dampened import spending. This is the first real "China 2.0 shock", China's broad retreat as a buyer in both primary and industrial global markets.

Second, there's also a marked sectoral shift away from traditional labor-intensive exports in favor of new capital-intensive products. Everything you read about the onslaught of Chinese cars, batteries, solar panels and steel showing up in global markets in recent years is still true - but is equally offset by Chinese market share declines in light manufacturing and IT/electronics sectors over the same period. Simply put, China is not exporting "everything" but rather moving aggressively up the value-added chain. This does hurt competitors in developed markets, but also offers new expansion opportunities for low-end neighbors as well.

Also, we note that the "big export reallocation" away from the US towards Europe and other markets is overstated. Chinese export share to the US has fallen, but not nearly as much as US data would suggest. And the main offset has not been to Europe, or even to the rest of Asia; rather, the biggest compensating move has been to Russia and the Middle East, with more moderate gains in the rest of the global South.