Exports to US, EU push China towards record trade surplus

China's exports experienced a remarkable surge of 36.3% year-on-year in September, as reported by customs authorities. This significant growth surpassed the 25.7% increase anticipated by analysts in a Bloomberg survey. Imports also saw a substantial rise of 31% in the same month, yet China maintained a trade surplus of $133.5 billion, the largest monthly figure since January 2025.

The country's cumulative trade surplus through September reached a staggering $938.1 billion, positioning it on track to surpass the previous record of $1.2 trillion surplus achieved last year.

Despite the robust export performance, domestic demand remained subdued, with retail sales growing by a mere 0.4% year-on-year in August. Consequently, Beijing has been heavily reliant on exports to achieve its annual growth target of 4.5% to 5%. However, this export boom has drawn criticism from major trading partners, including the United States and the European Union.

The United States, which had recently concluded a trade war with China, witnessed a 39.6% increase in shipments to the country in September. Meanwhile, EU shipments grew by 25.3%, while EU imports remained unchanged, resulting in China's trade surplus with the bloc reaching unprecedented levels.

EU officials have expressed concern over the persistent trade deficit with China, which currently stands at over €1 billion per day. They have pledged to rebalance the trade relationship, with talks between China and EU trade chiefs recently concluding with an agreement to limit the export of Chinese hybrid vehicles to Europe. While this measure represents a minor portion of bilateral trade, EU economists anticipate that further restrictions on strategic sectors could have a limited impact on China's economy, according to Nguyen Hoang Nam, a China economist at Capital Economics.