China’s exports declined in October for the first time in nearly two years, signaling renewed strain in global demand and marking a pause in the country’s fragile trade recovery, even after recent progress in easing tensions with the United States.
According to data released by China’s General Administration of Customs, outbound shipments fell 1.1% year-on-year in U.S. dollar terms, ending a seven-month streak of growth. The contraction, which caught economists by surprise, followed a strong 8.3% rise in September and was largely attributed to a high base from last year and the fading of front-loading by exporters ahead of the U.S.-China leaders’ meeting.
Economists surveyed by Reuters had expected exports to grow by 3%, underscoring the magnitude of the miss. Imports, meanwhile, rose just 1%, falling short of the 3.2% forecast, as weak consumer confidence, sluggish housing activity, and soft labor conditions continued to depress domestic demand.
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Reuters quoted Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, saying the slowdown was expected after months of accelerated shipments.
“It seems the frontloading finally faded in October,” he explained, adding that exports would likely normalize in the coming months as both Washington and Beijing suspended additional trade curbs for at least one year.
The cooling momentum came just days after U.S. President Donald Trump and Chinese President Xi Jinping met in South Korea, where both sides agreed to de-escalate trade tensions that had threatened to spiral into another full-blown tariff war. The agreement included the rollback of several punitive measures, such as export controls and tariffs on critical minerals and advanced technology, while Beijing committed to purchasing more U.S. agricultural products and strengthening efforts to stop fentanyl exports.
As part of the deal, the effective U.S. tariff rate on Chinese exports fell to 31%, according to estimates by Macquarie Group. Yet, the effects of earlier trade restrictions remain visible in the latest customs data. Exports to the U.S. plunged 25% in October from a year earlier, marking the seventh consecutive month of double-digit declines, while imports from the U.S. fell by nearly 23%.
Trade between the two largest economies has been shrinking steadily through 2025. In the first ten months of the year, Chinese shipments to the U.S. dropped 17.8%, while U.S. goods entering China declined 12.6%, narrowing the bilateral trade surplus by 20% to $233 billion.
Still, Beijing has managed to maintain overall export growth of 5.3% during the period, thanks to aggressive efforts by Chinese exporters to diversify into alternative markets. Shipments to the Association of Southeast Asian Nations rose 14.3%, to the European Union by 7.5%, and to Africa by 26.1%.
That diversification helped China’s total trade surplus swell to $964.8 billion in the first ten months of 2025 — 23% higher than the same period in 2024. The numbers highlight Beijing’s success in pivoting toward developing regions to offset its weakening trade with the U.S.
Oxford Economics expects this trend to persist, projecting Chinese exports to grow between 3.5% and 5% annually in real terms. The research firm also upgraded its outlook for China’s GDP growth to 4.5% in 2026 and 4.4% in 2027, supported by Beijing’s ongoing industrial expansion and the push to deepen manufacturing capabilities under the next five-year plan.
But analysts warn that exports alone cannot sustain growth for long. Now that export momentum weakens, China needs to rely more on domestic demand, Zhang said, suggesting that policymakers will likely unveil fresh fiscal stimulus in early 2026.
Larry Hu, chief China economist at Macquarie Group, agreed, saying Beijing would increasingly turn to local consumption to drive the economy.
He said at some point between 2026 and 2030, boosting domestic demand will become the central growth strategy.
Beijing is expected to retain its “around 5%” GDP growth target next year, using calibrated stimulus to balance recovery without triggering overheating. The government has also stepped up campaigns to address industrial overcapacity, a long-standing issue that has led to intense price competition and thinning profit margins across key sectors.
China’s National Bureau of Statistics reported that profits at major industrial firms rose 3.2% in the first nine months of the year, a modest gain that masks significant stress in manufacturing. Purchasing Managers’ Index data showed factory activity contracted for the seventh straight month in October, signaling that the global slowdown and renewed trade friction are still weighing heavily on China’s industrial base.
The latest figures suggest that while the trade truce with Washington offers some breathing space, China’s export engine remains vulnerable. With front-loading exhausted and global demand uneven, Beijing faces the challenge of engineering a more balanced recovery.