Export Growth
January 19, 2026
China sees trade surplus as more partners shift from US
Written by Greg Wittbecker
November’s trade data for China had already surpassed the full-year trade surpluses in previous year. December was simply the icing on the cake.
December posted a $114.1 billion surplus, marking the seventh consecutive month with surplus exceeding $100 billion. This brought China’s full-year 2025 surplus to $1.19 trillion, up 20% from 2024. The total value of exports rose 5.5% to $3.77 trillion.
Continued rotation away from the United States
China’s year-long emphasis on non-US markets proved decisive:
- US exports: down 20%
- Africa: up 25.4%
- ASEAN (Southeast Asia): up 13.4%
- European Union (EU): up 8.4%
- Latin America: up 7.4%
Another ongoing trend was growth in higher-value export mix:
- Semiconductors (+26.8%), ships (+26.7%), and automobiles (+21.4%)
- Lithium batteries and wind turbine exports surged 26.2% and 48.7%, respectively
By contrast, commodity goods exports declined, weighed down by reduced shipments to the US. These included toys (-12.7%) and footwear (-11.3%), according to data from the China National Bureau of Statistics and General Administration of Customs.
Strong exports and weak domestic consumption is an untenable combination
China’s central planners face a dilemma. While robust exports are keeping industrial output strong and supporting 5% GDP growth for 2026, they continue to mask weak domestic consumption.
Retail sales in December rose just 0.9% year over year (versus expectations of 1.2%, and down from 1.3% previously), extending a steady decline throughout 2025.
Weakness in housing persists, with falling home prices eroding consumer confidence. As in the US, a diminished wealth effect is restraining household spending.
Strong exports could eventually backfire
China’s export engine is firing on all cylinders, particularly in shipments to the EU.
However, this momentum could eventually provoke trade action in response to mounting complaints from domestic EU producers. Even emerging markets in ASEAN and Latin America could push back against higher Chinese imports if domestic producers begin to protest.
US trade policy rhetoric and its spillover effects on global trade
Canada’s recent announcement of trade deals with China signals growing frustration among traditional US trade partners. Weary of repeated tariff threats from President Trump, Canada has opened its market to Chinese electric vehicles while securing increased access to China for its canola seed exports.
The EU and India are also expanding trade ties with China as a counterbalance to the US. These developments may temper domestic producer pushback in those regions, particularly if exports to China continue to rise.
Why this matters
Trump has said the US doesn’t need goods from Canada or Mexico. His recent tariff threats against the EU, along with threats to raise tariffs over Greenland, suggest his broader belief the US does not need EU goods either.
This dynamic plays directly into China’s hands, encouraging more countries to pursue deeper bilateral trade relationships with Beijing.
Increasingly, countries appear willing to tolerate higher Chinese imports in exchange for improved access to China’s market, rather than accept the volatility inherent in current US trade policy.
