China’s Trade Surplus Nears $1 Trillion as Exports Surge

During the January-September period, China’s overseas sales reached $3.37 trillion, marking a 21.3% gain compared with the same span a year earlier, ICIS reported. In September alone, inbound goods climbed 31.0% year on year to roughly $291 billion, outpacing August’s 28.2% increase to $282.4 billion, while nine-month imports amounted to $2.43 trillion, a 27.5% rise.

Read also: China Exports Surge 36.3% in September, Topping Forecasts

The monthly trade gap expanded to $133.53 billion in September from $119.1 billion in August, the widest in 20 months. The accumulated surplus for January through September came to $938.11 billion, positioning China to surpass the $1 trillion level sooner than it did a year earlier. In 2025, the country’s full-year trade surplus was $1.189 trillion, having cleared the $1 trillion barrier in November.

Technology Goods Fuel Trade Growth

Advanced technology items and transportation equipment have been key engines behind China’s export expansion in 2026, and inbound shipments have likewise been heavily weighted toward tech goods. Robust worldwide spending on artificial intelligence infrastructure has underpinned demand for Chinese technology exports and imports, including semiconductors and automatic data processing equipment.

Lynn Song, chief economist for Greater China at Dutch banking and financial information services provider ING, observed that as China climbs the value-added ladder, its most rapidly expanding exports increasingly feature higher-margin products, while lower-end manufacturing relocates to other parts of the region.

The geographic distribution of China’s trade has shifted as well, partly as a reaction to elevated trade barriers. Song pointed out that the US represented 10.3% of China’s exports during the first nine months of 2026, a steep decline from 19.2% in 2018, whereas ASEAN has emerged as China’s biggest export destination.

Shipments to the US jumped 39.6% year on year in September, lifting nine-month growth to 9.8%, as the trade truce between Washington and Beijing aided a rebound in bilateral commerce. That truce now runs through January 2027, and tariff reductions on $30 billion worth of goods such as toys, Christmas decorations and kitchenware are expected to sustain the recovery in Chinese exports to the US for the rest of the year, according to Song.

Chinese shipments to ASEAN climbed 52.3% year on year in September, pushing January-September growth to 28.7%. Exports to the EU grew 25.3% in September, the fastest pace in seven months, bringing nine-month growth to 16.4%. Shipments to South Korea soared 68.2% in September, the biggest rise since 2021, lifting January-September growth to 39.1%.

Song noted that the data breakdown indicates import growth stayed concentrated in technology products rather than signaling a broad recovery spanning multiple sectors.

Export Momentum Clashes With Soft Domestic Economy

China’s surging foreign trade stands in contrast to enduring softness in its home economy, where household spending and capital investment remain strained by an extended property-market slump.

On 13 October, the International Monetary Fund trimmed its 2026 China GDP growth projection by 0.1 percentage point to 4.5%, down from the 4.6% it forecast in July. The updated figure sits at the lower bound of Beijing’s official 4.5-5% target for the year. The IMF stated that weak household consumption and softening investment amid ongoing property-sector strains were only partially counterbalanced by strong export results. It anticipates growth easing further to 4.0% in 2027, with Beijing’s policy measures averting a sharper slowdown, and cautioned that elevated global oil prices, together with lingering uncertainty and structural obstacles, are likely to restrain activity.

Nomura characterized the economy’s present condition as a major divergence accompanied by domestic weakness. The firm observed that key economic indicators remained weak in August, while September purchasing managers indices showed only a seasonal uptick, and its economists anticipate just a modest growth rebound in September.

According to Nomura, net exports of goods and services are expected to add 1.2 percentage points to GDP growth in 2026, versus 1.4 percentage points in 2025, underscoring how much foreign demand matters in counterbalancing feeble domestic activity. Nomura forecasts a $1.161 trillion trade surplus for 2026, compared with the record $1.189 trillion in 2025, before the surplus expands to $1.272 trillion in 2027.

Export resilience may lessen the near-term imperative for forceful stimulus, though officials have already rolled out additional steps to shore up weak domestic activity. In late September, the People’s Bank of China, the Ministry of Finance and the National Financial Regulatory Administration introduced measures designed to reduce financing costs and boost central bank lending. These included a 25-basis-point cut to the pledged supplementary lending rate and a CNY 700 billion expansion of the central bank’s re-lending quota for designated sectors. Authorities also broadened pledged supplementary lending support to the government’s Six Networks infrastructure program and launched an interest subsidy scheme for mortgage payments.

Nomura said it anticipates only a modest lift from these easing steps. The firm expects Beijing to deliver further support but does not foresee additional cuts to banks’ reserve requirement ratio or policy interest rates during the rest of 2026, and its economists said Beijing is likely to keep fiscal spending proactive and monetary policy accommodative to tackle exceptionally feeble domestic demand.

Trade Frictions and Tech Cycle Present Risks

China’s growing trade surplus is intensifying pressure from key trading partners looking to correct widening imbalances. In September, China posted a $34.8 billion surplus with the EU and a $34.01 billion surplus with the US, the latter the largest in 20 months. On 12 October, the EU and China agreed to curb Chinese hybrid-vehicle shipments into the bloc, with specifics due to be announced in December.

According to Song, the recent US-China trade deal and headway in talks between Beijing and Brussels should foster a comparatively steady trading climate through the end of 2026, and he said key trade relationships appear set to stay stable through year-end, keeping this year’s main growth engine running.

Song warned that risks may intensify in 2027, especially should the global technology investment cycle lose momentum or new tariff actions emerge as China grows more dependent on foreign demand. Nomura separately flagged US-China relations, the pace of domestic policy support, property and stock market developments and Middle East tensions among the principal risks to China’s economic outlook.

A sharp deterioration in exports would eliminate one of the economy’s strongest pillars of support and heighten pressure on Beijing to strengthen domestic demand.

Source: IndexBox Market Intelligence Platform  

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