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

China's trade surplus surpassed the US$1 trillion mark in the first ten months of the year, driven by the global surge in AI investments and exports of high-tech products, according to customs data. This marks the second consecutive year China has achieved a surplus exceeding US$1 trillion, a milestone reached a month earlier than in 2025. The record-breaking figures highlight Beijing's growing dependence on overseas demand to support an economy weakened by weak domestic consumption and a prolonged property slump.

Exports increased by 35.2% in October compared to the same period last year, slightly below the 36.3% surge in September but surpassing analysts' expectations of a 33.5% rise. This boost in exports helped lift China's trade surplus to US$1.04 trillion for the first ten months, surpassing the US$1 trillion threshold for the second year in a row.

The surge in exports is expected to continue into 2027, fueled by the ongoing AI boom. However, this growing reliance on overseas demand could deepen domestic imbalances and potentially fuel trade tensions with major partners, including the European Union. Leaders in Brussels have called for stricter trade regulations with China following an agreement to limit Chinese exports of hybrid vehicles to the bloc over the next few years, measures that are yet to take effect.

Chinese manufacturers are anticipated to expedite shipments to capitalize on the favorable conditions, mitigating the impact of the pending restrictions.

Despite the strong export growth, Beijing faces challenges as domestic consumption remains subdued. The property market downturn has dampened household wealth and undermined consumer confidence, leading to sluggish demand at home. China's car exports maintained a robust growth pace in October, while domestic vehicle sales recorded a 12th consecutive month of decline, according to separate industry data. This heightened dependence on exports leaves China's economy vulnerable to any slowdown in global demand.

The Asia-Pacific Economic Cooperation (APEC) summit, scheduled to take place next week in Shenzhen, a hub for technology and innovation in southern China, will bring together Chinese President Xi Jinping and US President Donald Trump for their third meeting this year. The summit comes amid concerns about the risks of additional tariffs and trade barriers, as Chinese manufacturers expand their presence in overseas markets and the global AI investment boom persists.