Hong Kong: China closed 2025 with its largest-ever annual trade surplus, reaching an estimated $1.2 trillion, buoyed by strong overseas demand and a year-end surge in shipments despite persistent geopolitical tensions and weakening orders from the United States.

Official customs data showed that exports grew 6.6% in December from a year earlier, outperforming economists’ expectations and marking an acceleration from November’s 5.9% increase. Imports also strengthened, rising 5.7% in December compared with 1.9% in the previous month. 

Full-year trade performance

For all of last year, China’s exports expanded 5.5% to $3.77 trillion, while imports were flat at $2.58 trillion, resulting in a 2024 surplus of $992 billion. The country first crossed the $1 trillion surplus threshold in November, when the cumulative trade gap for the first 11 months hit $1.08 trillion.

Economists say external demand continued to prop up China’s economy through 2025, even as domestic spending remained sluggish. Strong global appetite for computer chips, electronics and manufacturing materials helped offset weaker orders from the U.S., where escalating trade friction under President Donald Trump weighed heavily on bilateral flows.

Shipments to markets in Southeast Asia, South America, Africa and Europe helped make up for the downturn in U.S.-bound exports.

Outlook for 2026

Analysts expect exports to remain a key growth driver this year.

“We continue to expect exports to act as a big growth driver in 2026,” said Jacqueline Rong, chief China economist at BNP Paribas.

However, Chinese officials acknowledge the challenges ahead. Wang Jun, vice minister of the customs administration, warned that the external environment is “severe and complex” heading into 2026, though he insisted the country’s “foreign trade fundamentals remain solid.”

Gary Ng, senior economist at Natixis, projects China’s exports will grow around 3% this year–slower than 2025’s 5.5%--but expects the trade surplus to stay above $1 trillion given still-muted import growth.

Weak domestic demand persists

China’s export strength contrasts sharply with its faltering domestic economy. A prolonged property slump has dampened household confidence, while efforts to stimulate consumer spending have delivered only limited results. Authorities have rolled out subsidy schemes encouraging people to replace older appliances and vehicles with newer, more energy-efficient models, but the impact has been modest.

“We expect domestic demand growth to stay tepid,” Rong said. “In fact, the policy boost to domestic demand looks weaker than last year -- in particular the fiscal subsidy program for consumer goods.”

The International Monetary Fund has urged Beijing to address structural imbalances and accelerate the shift away from export-led growth by strengthening domestic consumption and private investment.

Global concerns over oversupply

China’s widening trade surplus has intensified concerns among trading partners that a surge of low-cost exports could undercut local industries. Even so, the robust external sector helped China maintain economic growth close to its official target of around 5% in 2025. (AP)