China's Trade Surplus Highlights Economic Strength and Vulnerabilities

China's trade surplus has surpassed $1 trillion for the first time, highlighting both its economic strength and vulnerabilities. Data released shows that in the first 11 months of this year, China's trade surplus in goods reached $1.076 trillion, despite a significant drop in exports to the United States, which fell by nearly a third in November.

Chinese Premier Li Qiang noted that the negative impacts of tariffs have become increasingly clear, as the decline in US exports raises concerns about China flooding other markets, particularly in Southeast Asia and Europe, with low-cost goods.

Experts suggest that many goods destined for Southeast Asia may ultimately reach the US through trans-shipment practices to circumvent tariffs. Demand in the US for affordable products remains, with the US importing $23.1 billion in goods from Indonesia in the first eight months of this year, a 30% increase from the previous year, largely attributed to redirected Chinese products.

While the overall exports from China grew by 5.4% this year, certain sectors, including semiconductors, experienced even greater increases, with exports rising by 24.7%. Exports to the EU also saw a significant rise of 14.8% in November.

French President Emmanuel Macron recently warned Xi Jinping about potential tariffs related to the EU trade deficit. Economists predict that China's global export share will grow from 15% to 16.5% by 2030.

Despite this robust export performance, analysts highlight China's ongoing reliance on foreign markets, as domestic consumption remains low compared to the US, with consumer spending in China accounting for about 50% of GDP compared to 80% in the US.

The Chinese Communist Party has recognized the need to boost domestic demand, making it a priority for 2026, but challenges remain as households continue to prioritize saving, exacerbated by the pandemic and a recent real estate crash that has diminished savings for many citizens.