San Francisco Frontiers - China heads for record trade surplus as exports surge

The world's second-largest economy recorded a $133.5-billion trade surplus in September, the most since January 2025, driven by exports surging 36.3 percent year-on-year, according to China's customs administration.

Imports also grew 31 percent, but China's cumulative trade gap through the end of September still reached $938.1 billion, putting it on course to break the record $1.2-trillion total recorded last year.

The data came days after the EU trade chief Maros Sefcovic held talks in Beijing aimed at reducing what he called an "unsustainable" gap between imports and exports of around a billion euros a day.

Shipments to the 27-nation bloc rose 25.3 percent in September, while imports were flat, pushing China's trade surplus with the bloc to new heights.

"China's trade surplus with the EU and the UK also reached a new high, which will likely add to trade tensions," said Nguyen Hoang Nam, China economist at Capital Economics.

Talks last week between Sefcovic and Chinese counterpart Wang Wentao ended with an agreement to limit exports of Chinese hybrid vehicles to Europe.

Sefcovic told reporters Friday that this was a "first step" toward rebalancing trade with China, which the EU accuses of using subsidies and unfair trade practices to outcompete European firms.

"Brussels is considering expanding restrictions to more strategic sectors, though we estimate that the impact of this on China's economy would be small," Nguyen wrote.

Shipments to the US rose 39.6 percent in September, up from a low base last year when trade cratered after Beijing and Washington slapped punitive tariffs on each other's goods.

Chinese President Xi Jinping met with Donald Trump last month in Washington, where the two sides vowed to extend a trade truce they agreed in October 2025 and to explore tariff cuts on $30 billion of goods on each side.

- AI demand -

Imports and exports both grew faster than the 25 percent and 25.7 percent increases predicted by a Bloomberg survey of analysts, driven by demand in China and abroad for AI-related products like semiconductors and computing equipment.

But growth was mainly caused by price increases for many of these products.

September's exports of integrated circuits, for example, rose just one percent in volume but by 136 percent in dollar terms.

Vehicle export volumes, however, soared 56.3 percent compared with September last year, hinting at strong foreign demand for Chinese electric vehicles.

With domestic demand weak by comparison -- retail sales grew just 0.4 percent on-year in August -- Beijing has relied on exports to meet its annual economic growth target of 4.5 to 5 percent.

On Tuesday, the IMF downgraded its growth forecast for China to 4.5 percent, slowing to 4 percent in 2027.

O.Anderson--SFF