China’s Trade Surplus Hits Record $1.19T as Exports Smash Forecasts

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• China’s exports beat forecasts, lifting the annual trade surplus to a record high.
• Trade with the U.S. continues to decline amid lingering tariff tensions.
• Global institutions warn the surplus could fuel protectionist responses.

China closed the year with a powerful trade performance, as exports and imports both exceeded expectations in December, pushing the country’s annual trade surplus to a record high. The data highlights the resilience of China’s export engine even as domestic demand remains soft and trade ties with the United States continue to cool.

Customs figures released Wednesday showed exports rising 6.6% in U.S. dollar terms from a year earlier, well above forecasts and faster than November’s pace. Imports also surprised to the upside, climbing 5.7%—their strongest growth in three months—signaling a modest pickup in demand for foreign goods.

Exports Outperform as China Leans on Global Demand

For the full year, China’s exports grew 5.5% while imports were largely flat, lifting the trade surplus to $1.19 trillion, about 20% higher than the previous year. Shipments increasingly flowed to markets outside the U.S., particularly Europe and Southeast Asia, where export growth reached double digits in December.

By contrast, trade with the United States weakened sharply. Exports to the U.S. fell for a ninth straight month, while imports from the country also dropped, reflecting ongoing tariff tensions and a gradual decoupling between the world’s two largest economies.

Chinese officials emphasized dialogue over confrontation, calling for cooperation to stabilize trade ties and reduce friction.

Record Surplus Raises Global Concerns

While the export surge has supported growth at home, the widening trade gap is drawing criticism abroad. Economists warn that China’s growing surplus could strain the global trading system, especially as other nations respond by protecting domestic industries.

International institutions have echoed those concerns. The International Monetary Fund has urged Beijing to rely less on exports and accelerate reforms aimed at boosting household consumption. Weak consumer demand, driven by a prolonged property downturn and job market uncertainty, has kept inflation near zero, underscoring the imbalance in China’s growth model.

Policy Outlook and Strategic Commodities

Despite the trade surge, analysts expect Beijing to maintain its current policy stance in the near term. Strong exports have helped offset sluggish domestic activity, reducing pressure for immediate stimulus. Improved relations with Washington, including a temporary trade truce and renewed agricultural purchases, have also eased short-term risks.

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China’s imports of key commodities offered mixed signals. Soybean purchases rose modestly, while exports of rare earths—a critical input for global manufacturing—jumped sharply, reinforcing China’s strategic role in supply chains.

Growth Outlook Remains Cautious

Looking ahead, global lenders see steady but slower expansion. The World Bank recently raised its growth forecast for China in 2026, citing export resilience and fiscal support. Still, the challenge remains clear: sustaining growth while rebalancing the economy away from heavy reliance on trade.

As China prepares to release its latest GDP figures, the record surplus stands as both a strength and a warning sign for the world’s second-largest economy.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.