China’s trade surplus soars past US$1tril as AI boom powers exports

China's trade surplus has reached a record-breaking US$1 trillion within the first ten months of the year, driven by a surge in exports fueled by the booming global AI industry. This surge in exports came as a surprise, as it surpassed economists' predictions of a 33.5% increase, with October's exports rising by 35.2% compared to the same period in 2025. The growing demand for Chinese technology products, largely due to the AI boom, is expected to continue until 2027, further bolstering China's trade surplus.

The escalating trade surplus has raised concerns among China's trading partners, especially the European Union, which has been advocating for more trade restrictions to mitigate Beijing's dominance in global markets. China's officials are aware of the potential trade frictions stemming from their expanding presence in overseas markets, thus extending a trade truce with Washington by two months. However, there is a looming threat of additional tariffs and trade barriers, which could impact China's economic growth in 2027.

Despite the overall growth in exports, Chinese domestic demand remains weak, a factor that has exacerbated the nation's reliance on overseas demand to keep its economy afloat. This trend is expected to continue, as Chinese manufacturers expand their reach in foreign markets. Sluggish domestic consumption has placed China's economy in a precarious position, making it vulnerable to any potential slowdown in global demand.

The Asia-Pacific Economic Cooperation summit, scheduled to take place next week in Shenzhen, will bring together Chinese President Xi Jinping and US President Donald Trump, marking the third meeting between the two leaders this year.