Commentary: China’s Record $1.19 Trillion Trade Surplus Marks Economic Pivot

1. Despite intensifying economic pressures and new tariffs from Washington under President Donald Trump, China's export sector demonstrated resilience in 2025, reporting a record goods trade surplus of $1.19 trillion. This was a 19.8% increase compared to 2024, as per data from the General Administration of Customs. The thriving export industry supported domestic economic stability, with net exports contributing 1.64 percentage points to China’s GDP growth—the second-highest contribution since 2007 other than the pandemic-driven boom of 2021. [para. 1][para. 2]

2. Since its accession to the World Trade Organization in 2001, China has embedded itself deeper in the global economy. Over two decades, its goods trade surplus has grown at an average annual rate of 18%, propelled by rapid export growth and increasing sophistication in its output. [para. 3]

3. In 2025, China’s trade surplus was buoyed by strong export growth and stagnant import levels. Exports grew 5.5% annually, with China accounting for over 15% of global exports—a new high. Two main factors drove this: trade diversification (exports to ASEAN, Africa, and other non-U.S. nations rose, despite a decline to the U.S.) and an upgrade in export quality (shifting from low-end goods to higher-value items like auto parts and industrial machinery). Import growth was flat due to low global commodity prices, greater self-sufficiency, and U.S. restrictions on advanced technology exports. Restrictions particularly affected high-tech imports like semiconductors and machinery, with falling prices for crude oil and iron ore also reducing import values. [para. 4][para. 5]

4. China ran a trade surplus with 196 out of 249 trading partners in 2025. The largest surpluses came from Hong Kong, the EU, the U.S., ASEAN, India, Mexico, the UK, UAE, Turkey, and Nigeria, while deficits were mainly with Taiwan, Australia, Brazil, South Korea, Switzerland, Oman, Russia, Peru, Iraq, and Chile. Surpluses were driven by strong demand from developed economies and capital goods requirements in emerging markets. In contrast, deficits resulted from substantial imports of resources and high-tech components from technologically advanced partners. [para. 6][para. 7][para. 8]

5. The bilateral trade surplus with the U.S. dwindled in significance due to falling Chinese exports (down 20%) and a 22.3% narrowing of the surplus to $280.4 billion (23.6% of China’s total surplus). This was influenced by U.S. tariffs, regulatory constraints, and disruptions such as the U.S. fentanyl tariff impacting trade routes through Mexico, contributing to a 1.2% decline in exports to Mexico. Conversely, surpluses with the EU ($291.8 billion), ASEAN ($275.8 billion), India ($116.1 billion), and Africa ($102 billion) hit new highs, driven by competitiveness in capital goods and rising demand in developing markets. The automotive sector highlighted this shift, with China achieving a record auto trade surplus with the EU, notably reversing its trade dynamic with Germany. [para. 9][para. 10][para. 11]

6. Lowering commodity prices trimmed deficits with some resource-rich countries, yet the deficit with Peru widened due to stronger metal demand. The trade gap with Russia expanded as weaker Russian consumption caused Chinese exports to slump 10.4%. Meanwhile, China’s deficits with Japan, South Korea, and Taiwan also grew, as imports of semiconductors—driven by demand from the AI and electric vehicle sectors—increased by double digits from all three sources. [para. 12]

7. China continued its long-term pattern of a large deficit in primary goods ($859.3 billion) and a substantial surplus in manufactured goods ($2.05 trillion) in 2025. The composition of its surplus changed, with high-value machinery and transport equipment now leading, while traditional low-margin sectors like furniture and textiles declined. From 2022 to 2025, the surplus in machinery and equipment rose from $762.6 billion to $1.02 trillion, while miscellaneous goods’ surplus dropped from $621.3 billion to $532.8 billion. While these advanced goods boost resilience against market volatility, they may attract future protectionist measures as emerging economies become independent industrial competitors. [para. 13][para. 14][para. 15]

8. The analysis is provided by Luo Zhiheng, chief economist at Yuekai Securities, with the usual disclaimer that these views may not represent those of the article’s publisher. [para. 16][para. 17]