China's trade surplus tops a trillion dollars for second straight year

China's trade surplus exceeded $1 trillion for the second consecutive year, official customs data released Tuesday showed, with the January-October surplus reaching $1.04 trillion and October exports surging 35.2 percent from a year earlier. Imports rose even faster, up 41.6 percent, partly on recovering crude shipments from the Persian Gulf, narrowing the monthly surplus to $105.3 billion from September's $133.5 billion. China remains on track to surpass last year's record $1.2 trillion surplus.

The composition explains the persistence. Semiconductor exports soared 137 percent in value year-on-year; autos rose 37.6 percent. Exports to the United States grew 32.9 percent in October — off a low base after last year's tariffs — while exports to the EU rose 24.3 percent, and 17.2 percent for the first ten months. The ten-month surplus with the US stands around $266.5 billion; with the EU, more than $310 billion. The EU recorded roughly $410 billion in deficit against China in 2025 — over $1.1 billion a day.

Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, attributes the surplus to overcapacity across many industries, excess domestic savings and weak domestic demand — China shipping its production abroad precisely as its customers raise barriers. "The situation is not sustainable," she said. Inside China, the competitive pressure shows in quality. Cinders Zhou, who sells eyewear for a manufacturer in Zhejiang province, described ferocious competition and "significant homogenization" that "has forced everyone to compete on price."

Washington's tariffs have not shrunk the flows so much as redirected them. Moody's Analytics economist Dave Chia flagged EU trade curbs as the bigger near-term risk, while Capital Economics' Nguyen Hoang Nam noted the EU measures cover only a small slice of Chinese exports. A two-month extension of a trade truce to January provides some relief to exporters; how long it lasts is unclear. Trade is expected to top the agenda when Donald Trump and Xi Jinping meet next week on the sidelines of the APEC summit in Shenzhen.

The vulnerability runs through one channel: if the AI boom slows or corrects, "lower chip and electronics prices and smaller shipping volumes would hit China's exports hard," Chia said. Until then, a surplus of this size is not a market outcome — it is a policy output, and someone absorbs it either way.