China’s trade surplus has exceeded $1 trillion for the second consecutive year, driven by a surge in exports, particularly high-tech products, despite sluggish domestic demand and mounting international trade restrictions.
Official customs data released on Tuesday showed that exports rose by 35.2 per cent year-on-year in October, while imports increased by 41.6 per cent.
Between January and October, China recorded a trade surplus of $1.04 trillion, although the monthly surplus narrowed to $105.3bn in October from $133.5bn in September as imports gathered pace.
The latest figures put the world’s second-largest economy on course to surpass its record $1.2 trillion trade surplus recorded last year.
Economists attributed the strong export performance to sustained demand for Chinese manufactured goods, particularly electronics, semiconductors and automobiles.
“We expect Chinese exports to stay strong for the rest of this year, led by electronics and autos,” an economist at Moody’s Analytics, Dave Chia, said.
However, analysts warned that China’s growing dependence on overseas markets reflects underlying weaknesses in its domestic economy, including sluggish consumer demand, excess production capacity and high domestic savings.
Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, said overcapacity in several industries and weak domestic demand were pushing Chinese manufacturers to sell more goods abroad.
She warned that the situation was unsustainable, particularly as other countries increasingly adopt trade protectionist measures to shield their domestic industries.
The intense competition has also forced Chinese manufacturers to cut prices, with businesses struggling to differentiate their products in an increasingly saturated market.
Trade restrictions by the European Union and heightened tariff barriers in the United States pose additional risks to China’s export outlook.
Analysts also warned that a slowdown in the global artificial intelligence boom could undermine Chinese exports, particularly semiconductors and electronic products, which have been major drivers of recent growth.
Meanwhile, trade tensions are expected to feature prominently in planned discussions between US President Donald Trump and Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation leaders’ summit later this month in Shenzhen.
A two-month extension of the trade truce between Washington and Beijing until January has provided temporary relief for exporters, although uncertainty remains over the future of the arrangement.
Despite the external pressures, strong export performance has helped China offset weak domestic demand, with the economy projected to achieve the government’s growth target of between 4.5 and five per cent this year, slightly below the five per cent expansion recorded last year. Me
