China’s trade surplus surged to an unprecedented $1.2 trillion in 2025, a figure that captures more than just export strength. It tells the story of an economy recalibrating under pressure, redirecting its industrial might away from the United States and deeper into emerging markets, while leaning heavily on external demand to offset persistent weakness at home.
Customs data released Wednesday showed the surplus reached $1.189 trillion for the full year, a level comparable to the entire economic output of a top-20 global economy. The threshold was first breached in November, cementing 2025 as a watershed year for China’s trade model.
The headline number reflects a deliberate policy shift that has been years in the making. As trade, technology, and geopolitical frictions with Washington intensified after President Donald Trump returned to the White House, Beijing pushed exporters to look beyond the world’s largest consumer market. Southeast Asia, Africa, and Latin America became priority destinations, not just as alternative outlets, but as platforms for Chinese firms to build global scale.
That strategy paid off. While exports to the United States slumped 20% in dollar terms last year and imports from the U.S. fell 14.6%, Chinese manufacturers made significant inroads elsewhere. Shipments to Africa jumped 25.8%, exports to the ASEAN bloc rose 13.4%, and sales to the European Union increased 8.4%.
In contrast to the sharp bilateral slowdown with Washington, China’s broader trade with the rest of the world barely skipped a beat.
“China’s economy remains extraordinarily competitive,” said Fred Neumann, chief Asia economist at HSBC.
He pointed to productivity gains and rising technological sophistication across Chinese manufacturing. But he also highlighted a less flattering driver behind the export surge: weak domestic demand and excess capacity pushing firms to seek buyers abroad.
That imbalance is becoming more visible. Monthly trade surpluses exceeded $100 billion on seven occasions in 2025, compared with just once the previous year. A softer yuan helped underpin the trend, making Chinese goods cheaper overseas and amplifying export momentum even as consumption and property investment at home remained subdued.
December’s data underscored the pace. Exports rose 6.6% year on year in value terms, beating economists’ expectations of 3.0% growth and accelerating from November’s 5.9%. The stronger-than-expected numbers steadied the yuan and lifted Chinese equities, with the Shanghai Composite and CSI300 indices both gaining more than 1% in morning trade.
For policymakers, the export performance offers short-term relief. “Strong export growth helps to mitigate the weak domestic demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
He added that, alongside a buoyant stock market and relatively stable U.S.-China relations, the government is likely to keep its macroeconomic policy stance unchanged at least through the first quarter of 2026.
Officials were quick to frame the surplus as proof of resilience. “With more diversified trading partners, China’s ability to withstand risks has been significantly enhanced,” said Wang Jun, a vice minister at the customs administration, at a briefing following the data release.
Yet the record surplus also sharpens longer-term questions. As China ships ever-larger volumes of goods abroad to counter a property slump and sluggish household spending, concerns are growing in other capitals about overcapacity and competitive distortions. Countries that rely on manufacturing exports of their own are increasingly wary of China’s expanding footprint, particularly in sectors tied to industrial policy and state support.
“Rising Chinese trade surpluses could raise tensions with trade partners,” Neumann warned, noting the risk of backlash as reliance on Chinese inputs and finished goods deepens.
However, heading into 2026, Beijing faces a delicate balancing act. The $19 trillion economy has shown it can reroute exports and absorb U.S. pressure, but doing so has intensified frictions elsewhere and exposed the limits of an export-heavy growth model. How long China can sustain growth by selling more goods to the rest of the world, without reigniting broader trade conflicts, is now one of the defining questions for the global economy.
