China's trade surplus exceeds $1 trillion for second year in a row, exports jump 35.2% in October: What's driving the surge?

While US President Donald Trump is likely to meet his Chinese counterpart Xi Jinping for the third time this year at the Asia-Pacific Economic Cooperation (APEC) summit in Shenzhen next week, Beijing’s trade surplus has soared past $1 trillion in the first 10 months of 2026.

The data comes amid a global race to build artificial intelligence (AI) infrastructure that has fueled demand for high-tech products and boosted exports, helping to offset weak domestic demand. This trend could further disrupt trade relations with major partners, Reuters reported.

China’s Exports Surpass $1 Trillion: What’s Behind the Increase?

In October, exports jumped 35.2% compared to the same month last year in US dollar terms, according to customs data released on Tuesday (local time). The increase was slightly below September’s 36.3% growth, but beat economists’ expectations of 33.5% growth. That helped push Beijing’s cumulative trade surplus to $1.04 trillion in the first 10 months of 2026, surpassing the $1 trillion mark for the second consecutive year and reaching the milestone a month earlier than in 2025.

China’s exports were $412.3 billion in October, while imports were $307.1 billion. However, the monthly trade surplus narrowed to $105.3 billion from $133.5 billion in September as imports grew at a faster pace.

Chinese imports rose 41.6% year-on-year in October, beating the 32% growth expected by economists in a Reuters poll. The growth also marked an acceleration from the 31% increase reported in September.

The data underscore Beijing’s growing reliance on exports to sustain economic growth amid low consumer spending and a prolonged downturn in the property sector. Although strong global investment in artificial intelligence is likely to boost demand for Chinese technology goods through 2027, analysts warn that greater reliance on foreign markets could expose the country to rising trade barriers while hiding underlying domestic economic challenges.

Customs data also showed exports of rare earths rose slightly from September, while crude imports jumped to their highest level since March as buyers adjusted to supply disruptions in the Middle East.

US-China trade data

China’s trade surplus with the United States narrowed slightly from $34.01 billion in September to $32.71 billion in October, according to the report, although the broader imbalance between the world’s two largest economies remains a source of friction.

Earlier on Monday, Beijing and Washington formally extended their trade truce until January 10, 2027, giving both sides more time to work on a broader trade understanding.

Are Chinese exports creating friction with the European Union?

The growing trade surplus may fuel further tensions with the European Union, where leaders have sought further trade restrictions on China. This comes after Beijing and the bloc reached an agreement to limit Chinese exports of hybrid vehicles to the European market over the next few years.

However, as the new measures have not yet come into force, manufacturers are likely to accelerate deliveries before they are implemented, which will boost exports in the short term.

(with inputs from Reuters)