China’s trade surplus surged past $1 trillion in the first 10 months as a global race to build AI infrastructure buoyed sales of high-tech products and helped offset weak domestic demand, a dynamic likely to sharpen tensions with major trading partners.
The figures highlight Beijing’s growing reliance on overseas demand to support an economy hobbled by subdued consumption and a protracted property slump. But while the global AI investment boom is expected to keep demand for Chinese technology products strong into 2027, it risks deepening domestic imbalances and fuelling trade frictions with partners including the European Union.
Exports rose sharply by 35.2% in October from the same month last year in US dollar terms, customs data showed on Tuesday, only a touch slower than the 36.3% surge in September, but ahead of economists’ forecast for an increase of 33.5%.
That helped lift China’s trade surplus to $1.04 trillion in the first 10 months, topping $1 trillion for a second consecutive year and reaching the milestone a month earlier than in 2025.
The swelling surplus could fuel further tensions with the European Union, where leaders have called for more trade curbs with China after reaching an agreement with Beijing to limit Chinese exports of hybrid vehicles to the bloc over the next few years. Because the measures have yet to take effect, factories are expected to bring forward shipments, bolstering exports in the near term.
China on Monday officially announced the extension of a trade truce with Washington due to expire on November 10 by two months, but said last week that expanding its purchases of US farm goods would hinge on the implementation of their agreed reciprocal tariff-reduction arrangement.
“The risk of additional tariffs and other trade barriers will remain elevated in 2027, particularly as Chinese manufacturers continue expanding their presence in overseas markets,” said Joe Peissel, lead macroeconomist at Trivium China.
Imports grew 41.6%, beating the median forecast for a 32% increase in the Reuters poll and accelerating from the 31% growth in September.
The Asia-Pacific Economic Cooperation summit will take place next week in the southern Chinese tech and innovation hub Shenzhen, where Chinese President Xi Jinping and US President Donald Trump are expected to meet for the third time so far this year.
HEADWINDS AND UNCERTAINTIES
One big worry for Beijing is that consumers remain reluctant to spend, constrained by a property market downturn that has battered household wealth and dented confidence in the economic outlook.
Sluggish demand at home has pushed Chinese automakers to seek sales in overseas markets. China’s car exports maintained a solid pace of growth in October, while domestic vehicle sales recorded a 12th straight month of declines, separate data released by an industry association showed.
Greater reliance on exports, however, leaves China’s economy increasingly exposed to any slowdown in global demand.
Much of the strength in exports this year has been fuelled by a global push to expand AI infrastructure.
“The outlook for exports depends on how long the AI boom will last,” Macquarie analysts wrote. They expect China’s exports to accelerate further in the fourth quarter before starting to slow from the first quarter of 2027.