China’s trade surplus tops $1 trillion for second straight year as exports surge

China’s trade surplus exceeded $1 trillion for the second consecutive year in the first 10 months of 2026, underscoring the strength of its export engine even as concerns mount over growing global trade imbalances and rising protectionist measures, Reuters reported.

Exports surged 35.2% year-on-year in October, while imports climbed 41.6%, according to data released by China's customs agency on Tuesday. The stronger growth in imports helped narrow the monthly trade surplus to $105.3 billion in October from $133.5 billion in September.

For January-October, China recorded a trade surplus of $1.04 trillion, putting it on course to surpass last year's record surplus of $1.2 trillion.


Read more: Global Market Today: Asian stocks rally after US tech surge, oil slump

The export performance has been supported by strong overseas demand for high-tech products, particularly semiconductors and automobiles. Exports are expected to remain resilient through the remainder of the year, led by electronics and vehicles, according to Dave Chia, an economist at Moody's Analytics, as reported by Reuters.

However, China's widening trade surplus has intensified concerns among its trading partners about the imbalance between its exports and imports. Several countries are increasingly considering measures to protect domestic industries from competition with Chinese manufacturers.

Overcapacity across several industries, elevated domestic savings and weak domestic consumption are contributing to China's dependence on overseas markets to absorb its excess production, Alicia García-Herrero, chief economist for Asia Pacific at Natixis, told Reuters. She warned that the situation was not sustainable.

The slowdown in China's domestic economy has also intensified competition among manufacturers, putting pressure on businesses to cut prices. Companies are increasingly competing on pricing amid product standardisation and concerns over declining quality, according to Cinders Zhou, an eyewear seller working with a manufacturer in Zhejiang province, Reuters reported.

Read more: US stocks: Dow rockets 1,100 points, S&P over 2% as oil slide cools inflation worries; Nvidia slumps

Trade tensions pose risks to export outlook

Rising trade barriers in the European Union represent a significant risk for Chinese exporters, particularly amid heightened trade restrictions and tariffs imposed by the United States, Chia said, according to Reuters.

China's export outlook also faces potential risks from a slowdown in the artificial intelligence industry. The strong demand for semiconductors and electronics has been an important driver of export growth, making the sector vulnerable to any correction in AI-related investments.

A slowdown in the AI boom could lead to lower chip and electronics prices, alongside reduced shipment volumes, hurting China's export performance, Chia told Reuters.

Concerns over the sustainability of the AI investment boom have gained traction following Democratic victories in the US midterm elections, amid growing public opposition to the expansion of data centres.

Trade is also expected to feature prominently in planned discussions between US President Donald Trump and Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation leaders' summit later this month in Shenzhen.

A two-month extension of the trade truce between the world's two largest economies until January has provided some relief to Chinese exporters. However, uncertainty remains over the longer-term outlook for trade relations.

US and European trade policies have created significant difficulties for Chinese businesses seeking to expand in overseas markets, Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, told Reuters.

Exports cushion China's domestic slowdown

Strong exports have helped offset persistent weakness in domestic demand, providing an important source of support for China's economy.

Beijing is expected to achieve its official annual economic growth target of 4.5% to 5% in 2026, although the pace would be slightly slower than the 5% expansion recorded last year.

The continued reliance on exports, however, highlights the challenges facing policymakers as they seek to rebalance the economy towards domestic consumption while managing growing trade friction with major trading partners.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)