For the first time! China trade surplus hits $1 trillion in November; exports to US continue to slide

China ended November with a historic milestone, recording an annual trade surplus of more than $1 trillion for the first time. Official figures released on Monday show that booming exports to markets outside the United States more than compensated for shrinking US demand.

The breakthrough came only weeks after Presidents Xi Jinping and Donald Trump negotiated a temporary pause in their long-running trade dispute during a late-October meeting. The truce halted the waves of punitive tariffs and export controls that had shaken global supply chains and prompted tit-for-tat retaliation from both governments.




Despite tensions easing, Chinese exports to the United States continued to deteriorate in November. Shipments fell 28.6% to $33.8 billion, yet the overall picture remained positive as orders from other regions lifted total exports by 5.9% compared with the same month last year. The November growth reversed October’s marginal decline and topped Bloomberg’s forecast of 4%.

"Weakness in exports to the United States was more than offset by shipments to other markets," Zichun Huang of Capital Economics wrote in an analysis, adding that "exports are likely to remain resilient, thanks to trade rerouting and rising price competitiveness as deflation pushes down China's real effective exchange rate," as cited by AFP.

With last month’s export surge added to the tally, China’s cumulative trade surplus for the first eleven months reached $1.08 trillion, already exceeding the full-year figure for last year. "China's trade surplus this year has already surpassed last year's level, and we expect it to widen further next year," Huang noted.

Beijing’s growing export dominance is likely to heighten friction with Western partners. French President Emmanuel Macron, fresh from a state visit to China, cautioned in an interview with Les Echos that Europe may introduce tariffs if China does not narrow its sizeable trade gap with the European Union. Macron warned that "Europeans will be forced to take strong measures in the coming months".

The latest data also highlighted ongoing domestic weakness. Imports expanded only 1.9% in November, missing Bloomberg’s prediction of a three percent rise. According to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, "The rebound of export growth in November helps to mitigate the weak domestic demand."

He added, "The economic momentum slowed in the fourth quarter partly driven by the continued weakness in the property sector."

The tariff truce agreed by Xi and Trump expires late next year, giving negotiators a narrow window to turn the temporary arrangement into a more durable agreement. Financial institutions are not convinced stability will hold. "There's no guarantee this uneasy truce will last that long," Lynn Song, ING chief economist for Greater China, said last week. "A lot needs to go right for the agreement to hold for the full year," he wrote, warning that "it seems prudent to expect a softer external demand backdrop for next year."

China’s leadership, which has targeted 5% economic growth for 2024, is expected to gather this week for a key meeting on economic strategy.

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