China’s trade surplus is on track to hit a new record this year, increasingly clashing with some of the world’s largest economies, widening the global trade imbalance and threatening to upset President-elect Donald Trump.
The gap between China’s exports and imports will reach nearly $1 trillion if it continues to widen at the same rate as the year to date, according to Bloomberg estimates. The goods trade surplus rose to $785 billion in the first 10 months, according to data released last week, the largest on record for the period and almost 16% growth from 2023.
“As China’s export prices were still falling, the growth in export volume was phenomenal,” Council on Foreign Relations senior fellow Brad Setser. he said X. “The overall story is one of an economy growing again from exports.”
China has relied more on exports to compensate for the weakness in domestic demand that Beijing has recently tried to address by stimulating the economy.
The increasingly unflattering image has prompted pushback from a growing number of countries, and the new Trump administration is likely to impose tariffs that would reduce the flow of exports to the US. steel and electric vehicles.
Foreign companies are also pulling money out of China, with passive foreign direct investment falling in the first nine months of the year, they said. the data was released on Friday. If the decline were to continue throughout the year, it would be the first annual net outflow of FDI since at least 1990, when comparable data began.
China’s (customs) trade surplus is rising to $1 trillion – up from $900 million, rising again in dollar terms.
Beijing’s response so far has been to promise more aid to businesses, with the state council announcing on Friday it would withdraw financial support for industries to promote steady growth in foreign trade, boost economic development and stabilize employment.
Chinese companies have increased their export performance in recent years. On the contrary, a slowing economy, increased electrification, and the growing substitution of foreign manufactures with domestic alternatives are suppressing demand for imports.
The October result was the third largest surplus in history, falling short of June’s record. The trade surplus measured in yuan reached 5.2% of nominal gross domestic product in the first nine months of this year, the highest since 2015 and above the average level of the past decade.
The surplus with the US increased by 4.4% this year compared to the same period last year. It grew by 9.6% with the European Union and jumped almost 36% with the 10 Southeast Asian nations of Asean, the latest figures show.
Imbalances with many other nations are also growing. China now exports more goods than it buys to nearly 170 countries and economies, the most since 2021.
A currency war may also be brewing. India’s central bank has said it is ready let the rupee be weak If China allows the yuan to fall to counter US tariffs.
A falling yuan would make China’s exports cheaper and widen its surplus with India, which has reached $85 billion this year, 3% higher than in 2023 and more than double the level of five years ago.
