China’s exports posted a robust and unexpected surge in November, driven by manufacturers successfully deepening trade ties with the rest of the world to counter the severe headwinds created by President Donald Trump’s prohibitively high tariffs.
The customs data, released Monday, confirms that the world’s second-largest economy is executing a major strategic pivot to diversify its export markets and utilize its global supply chain footprint.
China’s exports grew a significant 5.9% year-on-year, sharply reversing the 1.1% contraction recorded in October, and sailing past the 3.8% growth forecast in a Reuters poll. This performance is a direct result of trade rerouting—a tactic where Chinese firms leverage their global manufacturing capacity to establish new, low-tariff production hubs in countries like Vietnam, Mexico, and Indonesia, effectively using third countries as processing and shipment intermediaries.
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This practice is successfully offsetting the drag from US tariffs, which currently average 47.5% on Chinese goods, well above the 40% threshold that economists say erodes exporter profit margins.
The Collapse of US Trade and the Rise of New Markets
The key takeaway from the data is the stark divergence between the US market and the rest of the world. Despite news of a tentative US-China trade truce and agreed-upon tariff scale-backs following the October 30 meeting between Trump and Xi Jinping in South Korea, Chinese shipments to the US plummeted a massive 29% in November year-on-year.
This sustained collapse underscores the immediate and punitive impact of the current tariff regime. Economists estimate that diminished access to the U.S. market since Trump’s return to the White House has already reduced China’s export growth by roughly 2 percentage points, equivalent to around 0.3% of GDP.
The shortfall was more than compensated for by strong demand from new partners. Exports to the European Union grew by an annual 14.8%, shipments to Australia surged 35.8%, and fast-growing Southeast Asian economies took in 8.2% more goods over the same period. Zichun Huang, China economist at Capital Economics, noted that the agreed-upon tariff cuts failed to lift US-bound shipments, but “overall export growth rebounded nonetheless,” adding that “The role of trade rerouting in offsetting the drag from U.S. tariffs still appears to be increasing.”
Trade Surplus and Sectoral Drivers
The strong outbound performance boosted China’s trade surplus to $111.68 billion in November—the highest since June—and the trade surplus for the first 11 months of the year topped $1 trillion for the first time ever.
“Electronic machinery and semiconductors seem to be key,” said Dan Wang, China director at Eurasia Group.
She noted a shortage in lower-grade chips and other electronics, which caused prices to jump, while Chinese companies going global have been importing various machinery and inputs from China itself. In a sign of a slight easing of trade tensions, rare earth exports jumped 26.5% month-on-month in November, the first full month after Xi and Trump agreed to speed up shipment of the critical minerals. Furthermore, the nation’s soybean imports are poised for their best-ever year as Chinese buyers stepped up purchases from American growers alongside large purchases from Latin America.
Soft Domestic Demand and Policy Focus
The import figures indicated continued weakness in China’s domestic economy. Imports were up 1.9% in November, compared to a 1.0% uptick in October, but still fell short of the 3.0% increase expected by economists. This suggests that domestic demand remains soft due to a prolonged property downturn, evidenced by a decline in imports of unwrought copper, a key material in construction.
The strong export data helped the Chinese yuan firm on Monday, with the spot yuan trading at 7.07 per dollar. The People’s Bank of China (PBOC) set the midpoint rate at 7.0764 per dollar, using the daily fixing to act as a stabilizer for the currency.
Meanwhile, policy signals are expected from key year-end meetings as officials look to manage the economic shift. The Politburo pledged on Monday to take steps to expand domestic demand—a move analysts consider crucial for weaning the $19 trillion economy away from reliance on exports.
Officials are also convening for the annual Central Economic Work Conference to set key targets for the next year. Goldman Sachs analysts expect policymakers to emphasize easing measures aimed at boosting domestic consumption.
Lynn Song, ING’s chief economist for Greater China, concluded that China’s pivot to establishing domestic demand as a key driver of growth “will take time, but it’s essential for China to move into the next phase in its economic development.”