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.

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.”

Treasury Secretary Scott Bessent says the U.S. economy is finishing the year with unexpected strength, a narrative that has grown louder as fresh data shows American growth holding firm even after months of gloomy forecasts from economists.

His comments on Sunday came as part of a broader attempt by the administration to push back against frustration over the cost of living and to assert that the worst of the inflation wave may be easing.

Speaking on CBS News’ Face the Nation, Bessent said holiday shopping so far has been “very strong” and argued that momentum has been building for months.

“The economy has been better than we thought. We’ve had 4% GDP growth in a couple of quarters,” he said.

He projected that the year would close with “3% real GDP growth,” noting that the pace remained intact even with the “Schumer shutdown” disrupting federal operations and delaying key reports.

His confidence rests partly on the contrast between real-world data and the predictions many analysts made earlier this year. For much of 2025, economists warned that inflation would flare again toward the end of the year, driven by a mix of global supply tensions, higher energy prices, and Trump’s escalating tariff battles with China and several other trading partners. Many predicted a visible surge in prices by November and December.

So far, the feared year-end spike has not materialized. The latest inflation report — postponed during the shutdown — still showed prices rising at 3% year-over-year in September, with food-at-home costs up 3.1%. Those increases remain stubborn but have not accelerated in the way analysts once believed they would.

But economists warn that the threat is not gone. The tariff confrontations themselves are unresolved, and trade experts say that further escalation between Washington and Beijing could reignite cost pressures across major consumer categories. This is part of why many analysts remain cautious: inflation has cooled, but the underlying risks have not. Bessent did not address those concerns directly in the interview, but his upbeat tone suggests he sees the numbers as evidence that the economy is weathering tariff-related turbulence better than earlier forecasts suggested.

The broader growth picture has also been more resilient than expected. The year opened on shaky ground, with GDP contracting 0.6% year-over-year in the first quarter. But the second quarter delivered a sharp rebound at 3.8%. Now, the Federal Reserve Bank of Atlanta’s early estimate pegs third-quarter growth at about 3.5%, with the official Bureau of Economic Analysis numbers coming on December 23. If that estimate holds, the U.S. will have logged a solid three-quarter recovery arc that few predicted during the harsher months of inflation.

Still, American households have not felt much relief. Consumer sentiment remains severely depressed. The University of Michigan’s December reading came in at 53.3 — an improvement from November but far below last year, underscoring how disconnected consumers feel from the headline numbers. Food, rent, insurance, and basic goods continue to absorb a larger share of monthly budgets. With households responsible for nearly 70% of U.S. GDP, the mood on Main Street has become a central pillar of the political debate.

President Donald Trump has rejected the idea that affordability has become a source of hardship. During a cabinet meeting on Tuesday, he dismissed the topic outright.

“The word ‘affordability’ is a con job by the Democrats,” he said. “The word ‘affordability’ is a Democrat scam.”

But recent polling tells a different story. NBC News found that about two-thirds of registered voters believe the administration has fallen short on the cost of living and the broader economy.

When asked about the public’s dissatisfaction, Bessent attributed the price pressures to problems carried over from the Biden era. He argued that earlier Democratic policies created the supply constraints and regulatory friction that are still haunting households.

“The American people don’t know how good they have it,” he said. “Now, Democrats created scarcity, whether it was in energy or over-regulation, that we are now seeing this affordability problem, and I think next year we’re going to move on to prosperity.”

The administration is currently using the current run of GDP numbers to reinforce its case that the economy is stronger than its critics claim. But analysts counter that everything depends on what happens next: whether inflation continues to ease or whether the unresolved tariff confrontations push prices back up. The coming BEA report on December 23 is expected to offer the clearest picture yet, revealing whether the year truly ended on solid ground — and whether Bessent’s optimism is built on an enduring turn in the economic tide or a temporary burst of good numbers.