BEIJING, Dec 8 – China's trade surplus has exceeded $1 trillion for the first time. In November, manufacturers aimed to dodge President Donald Trump’s tariffs by increasing shipments to markets outside the U.S., leading to a significant rise in exports to Europe, Australia, and Southeast Asia.
Exports to the United States fell nearly 30% compared to the same month last year.
Zichun Huang, an economist at Capital Economics, noted, “The tariff cuts from the recent U.S.-China trade agreement did not boost shipments to the U.S. last month, but overall export growth has rebounded.” She added, “We expect China's exports to stay strong, allowing the country to gain more market share globally next year.”
Huang also pointed out, “The rerouting of trade appears to be increasingly helping to counterbalance the impact of U.S. tariffs.”
According to customs data released on Monday, China’s exports grew by 5.9% year-on-year in November, recovering from a 1.1% decline in October and surpassing the 3.8% growth forecasted in a Reuters poll.
Imports rose by 1.9%, compared to a 1.0% increase in October, which was lower than the anticipated 3.0% rise.
China's trade surplus for November was $111.68 billion, the highest since June and up from $90.07 billion the previous month. This figure exceeded the predicted $100.2 billion.
Throughout the first 11 months of the year, the trade surplus has surpassed $1 trillion for the first time.
Since Trump's victory in the November 2024 U.S. election, China has been working to diversify its export markets, strengthening trade relationships with Southeast Asia and the European Union. It is also using the global footprint of its companies to set up new production hubs for lower tariff access.
In November, exports to the U.S. fell by 29% year-on-year, while exports to the European Union increased by 14.8%. Shipments to Australia rose by 35.8%, and trade with the fast-growing economies in Southeast Asia saw an 8.2% increase.
The drop in exports to the U.S. occurred despite a recent agreement between the two largest economies to reduce some tariffs and implement various measures following a meeting between Trump and Chinese President Xi Jinping on October 30.
The average tariff imposed by the U.S. on Chinese goods is currently at 47.5%, significantly above the 40% level that economists say negatively impacts Chinese exporters' profit margins.
Dan Wang, China's director at Eurasia Group, remarked, “Electronic machinery and semiconductors play a key role in the rise of exports. There is a shortage of low-grade chips and other electronics, causing prices to spike. Chinese companies going global have been importing various types of machinery and inputs from within China.”
KEY MEETINGS AHEAD AMID US-CHINA TRADE UNCERTAINTIES
On Monday, China's yuan strengthened in response to better-than-expected export data, as investors await policy guidance from significant year-end meetings.
The Politburo, the top decision-making body of the Communist Party, has committed to taking steps to boost domestic demand, an essential move for reducing the $19 trillion economy's dependence on exports, according to analysts.
Key officials are also expected to meet soon for the annual Central Economic Work Conference to set important targets and outline policy priorities for the upcoming year.
Economists estimate that reduced access to the U.S. market since Trump returned to office has lowered China's export growth by around 2 percentage points, equivalent to about 0.3% of GDP.
October's unexpected decline, following an 8.3% surge the previous month, indicated that the strategy of front-loading shipments to the U.S. to avoid tariffs had reached its limit.
Despite reports of improvement in new export orders for November, Chinese factory owners are still facing challenges, as demand from U.S. buyers remains weak.
China's rare earth exports surged by 26.5% month-on-month in November, marking the first full month after Xi and Trump agreed to expedite shipments of these crucial minerals from the world's largest refiner.
China's soybean imports are also on track for a record year, as buyers who had largely avoided U.S. purchases for most of the year are now increasing imports from American growers in addition to larger orders from Latin America.
Overall, domestic demand in China remains weak due to a prolonged downturn in the property sector.
This weakness is evident in the decline of unwrought copper imports, an essential material for construction and manufacturing.
Lynn Song, ING's chief economist for Greater China, stated, “China's shift towards fostering domestic demand as a growth driver will take time, but it's crucial for the country to progress to the next phase of its economic development.”