If the current trend continues, the gap between Chinese exports and imports may approach nearly $1 trillion, as indicated by Bloomberg's calculations. The goods trade surplus surged to $785 billion in the first ten months of the year, marking the highest figure recorded for that timeframe and reflecting an increase of nearly 16% compared to 2023.
"With Chinese export prices continuing to decline, the growth in export volumes has been substantial," stated Brad Setser, a senior fellow at the Council on Foreign Relations, on X. "The overarching narrative is one of an economy once again driven by exports."
China has increasingly depended on exports to offset the sluggishness in domestic demand, a situation that Beijing has only recently begun to address through economic stimulus measures.
This growing imbalance has prompted backlash from a rising number of countries, and the incoming Trump administration is expected to implement tariffs aimed at curtailing exports to the United States. Nations across South America and Europe have already begun to impose tariff barriers on Chinese products, including steel and electric vehicles.
Additionally, foreign companies are withdrawing investments from China, with foreign direct investment liabilities declining in the first nine months of the year, as reported on Friday. If this trend persists throughout the year, it would mark the first annual net outflow of FDI since at least 1990, when comparable records began.
In response, Beijing has pledged to enhance support for businesses, with the state council announcing on Friday that it would increase financial assistance to industries to ensure stable foreign trade growth, promote economic development, and maintain employment levels.
Chinese companies have significantly enhanced their export capabilities in recent years. In contrast, a decelerating economy, increased electrification, and a growing trend of substituting foreign goods with domestic products are dampening import demand.
In October, the trade surplus reached its third-highest level on record, just shy of the peak observed in June. The surplus, measured in yuan, accounted for 5.2% of nominal gross domestic product during the first nine months of this year, marking the highest percentage since 2015 and exceeding the average for the past decade.
The surplus with the United States has increased by 4.4% compared to the same timeframe last year. It has risen by 9.6% with the European Union and surged nearly 36% with the ten Southeast Asian nations in ASEAN, according to the latest statistics.
Trade imbalances are also expanding with numerous other countries. China now exports more goods to nearly 170 nations and economies than it imports from them, the highest number since 2021.
Additionally, a potential currency conflict may be on the horizon. India’s central bank has indicated its willingness to allow the rupee to depreciate if China permits the yuan to fall in response to U.S. tariffs.
A declining yuan would render Chinese exports more affordable and could further amplify the surplus with India, which has reached $85 billion this year, reflecting a 3% increase from 2023 and more than double the figure from five years ago.