China’s trade surplus tops $1 trillion despite Trump’s attempt to contain it. Here’s what that means

China’s trade surplus roared above $1 trillion in November for the first time ever, despite the ongoing global trade war that has resulted in a steep drop in exports to the U.S.

In the first 11 months this year, China’s overall exports grew 5.4% compared to the same period in 2024 while imports fell 0.6%, taking its trade surplus to $1.076 trillion this year as of November, up 21.6% year on year.

The move come even as China’s U.S.-bound goods fell for an eighth straight month despite a recent trade deal between the two economies, even as overall exports surpassed market expectations in November as manufacturers loaded up shipments to other markets.

“China continues to rely less on selling stuff to the US,” wrote Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. “China has a massive pool of domestic savings and China will again try to encourage consumers to unleash more of it to lessen their dependency on manufacturing and exports.”

Outbound shipments surged 5.9% last month in U.S. dollar terms from a year earlier, China’s customs data showed Monday, topping economists’ forecast for a 3.8% growth in a Reuters poll. That growth marked a rebound from an unexpected 1.1% drop in October — the first contraction since March 2024.

Imports rose 1.9% last month, missing expectations for a 3% rise, as a protracted housing downturn and rising job insecurity continued to be drag on domestic consumption. Growth was higher compared to 1% in October.

Chinese officials have renewed pledges to expand imports and work toward balancing trade amid widespread criticism against its aggressive exports.

The trade data, though, bodes well for the nation’s growth prospects, according to Citigroup.

“We were one of the first to lift the full-year GDP forecast to 5% for 2025E in June … and the solid trade prints since have made us more confident of our forecast,” Xiangrong Yu, Citi’s chief China economist, said in a note. “We believe exports will remain a key driver for GDP growth next year amid the US-China tariff truce and China’s industrial competitiveness.”

Tensions with the U.S. have resulted in a sharp rollback of exports, though China still is able to indirectly get its goods to American ports through other nations such as Vietnam. Recent talks have helped ease some of the acrimony.

Exports to the U.S. plunged 28.6% in November, marking the eighth straight month of double-digit declines in shipments to the world’s largest consumer market, even after President Xi Jinping and his U.S. counterpart Donald Trump reached a deal in South Korea in late October. Imports from America shrank 19% from a year earlier.

While China’s trade surplus has surged, the U.S. trade imbalance has contracted sharply.

The U.S. trade deficit contracted fell to $59.6 billion in August, down from $78.2 billion in July and $71.2 billion from the same month in 2024. Exports were a record $62.4 billion, while imports also set a new standard at $13.6 billion. The year-to-date deficit which China stood at $185.2 billion, down about 21% from 2024.

“Despite the trade truce, the U.S. still imposes higher tariffs on China than on [many] other countries,” said Gary Ng, senior economist at Natixis, adding that Chinese exporters have likely continued to utilize their facilities in third markets to export to the U.S.”It can become a future norm,” Ng noted.

Levies on Chinese goods remain at around 47.5% according to Peterson Institute for International Economics. Beijing’s tariffs on imports from the U.S. stand at around 32%.

So far this year, China’s exports to the U.S. have declined 18.9% year on year, while imports have dropped 13.2%.

Shrinking U.S. exports in November were more than offset by surging shipments to other markets, particularly China’s two largest trading blocs, the European Union and the Association of Southeast Asian Nations. China’s exports to ASEAN and the EU rose over over 8% and nearly 15%, respectively.

However, challenges lie ahead.

“Policymakers are likely to stay mindful of potential trade conflicts despite the tariff truce with the US, in our view,” wrote Yu, the Citi economist. “Our base case is that the US-China truce will be sustained through 2026 despite being seemingly fragile, but there could be trade tensions with other partners – such as France … as China’s trade surplus rose to above [$1 trillion]. We believe China might adopt additional voluntary trade restrictions to mitigate the trade imbalance.”

Following the trade truce struck in October, Beijing and Washington agreed to roll back steep tariffs on each other’s goods, export controls for critical minerals and advanced technology, with China committing to buying more American soybeans and working with Washington to crack down on fentanyl flows.

China’s exports of rare earths accelerated in November, as it shipped out 5,494 tons of the critical minerals, up 24% from a year earlier and compared with 4,343.5 tons in October. The Ministry of Commerce has reportedly been designing a new rare earth licensing regime that could expedite shipments.

The country’s overall soybean imports grew 13% from a year earlier to 8.1 million metric tons in November, although down from the October level, signaling a slow start to fulfilling its promise of purchasing 12 million metric tons of U.S. soybeans by year-end.

“Looking into 2026, we expect export growth to remain resilient,” Jing Wang, China economist at Nomura, said in a note. “However, a moderation of export growth is likely, in our view. Export growth may revert to the long-term mean, despite China’s solid advancements in manufacturing, especially as more countries impose trade barriers.”

Wang added that the truce with the U.S. may not lost and “we see a second China shock fast approaching, and it might compel Europe to impose more restrictive measures to protect its manufacturing sector.”

Chinese policymakers are expected to meet later this month for the annual Central Economic Work Conference, to discuss economic growth target, budget and policy priorities for next year. The specific targets will not be officially announced until the “Two Sessions” meeting in March next year.

The rebound of export growth would help mitigate the drag from weak domestic demand, putting the economy on track to deliver the “around 5%” growth target this year, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

Beijing is expected to keep the 2026 growth target unchanged at “around 5%,” according to Goldman Sachs, which would require incremental policy easing early next year to ensure a growth acceleration from a likely lackluster reading in the fourth quarter of 2025.

China’s factory activity shrank for an eighth month in November, an official manufacturing survey showed, with new orders staying in contraction. A private survey focused on exporters showed manufacturing activity unexpectedly fell into contraction.

The Wall Street bank expects Chinese authorities to lift the augmented fiscal deficit ceiling by 1 percentage point of GDP, cut policy rates by a total of 20 basis points and step up stimulus measures to rein in the housing slump.

The strengthening yuan in recent weeks has not appeared to stem the flow of China’s exports. The offshore yuan has strengthened nearly 5% since April to 7.0669 per dollar at market open on Monday, according to LSEG data.

Despite a steady 5% annual GDP growth since 2023, China “urgently needs to curb its export dependence and pivot towards domestic consumption to ensure sustainable expansion,” Weijian Shan, chief executive of private equity firm PAG, said in an opinion piece last month.

A stronger yuan could boost consumption’s contribution to economic growth to the 2023 level of 86% from currently 53%, as it would lower costs of imports and enhance household purchasing power, Shan added.