Commentary: Where Did China’s $1.2 Trillion Trade Surplus Go?
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In 2025, China’s goods trade surplus hit a record $1.2 trillion, demonstrating the resilience of its manufacturing sector even amid rising global tariff barriers. Yet, a glance at China’s balance of payments reveals a striking paradox: official foreign exchange reserves remained largely unchanged. With the People’s Bank of China having exited routine currency intervention, a pressing question emerges: Where did this massive trade surplus go?
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- China's 2025 goods trade surplus hit $1.2T; current account surplus narrowed to $735B after $198.8B services deficit.
- $820B non-reserve financial outflows: $425.6B securities (much to Hong Kong via Southbound Connect), $293B other investments, $77B FDI.
- Shift from corporate hoarding to deliberate yield-seeking and equity allocation, with HK$1.4T Southbound inflows boosting Hong Kong markets.
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Who’s Who
- China International Capital Corp. Ltd.
- Miao Yanliang is a senior managing director and chief strategist at China International Capital Corp. Ltd. (中国国际资本股份有限公司). He is also an adjunct professor at Peking University’s National School of Development.
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