China’s September Trade Surplus Hits Record High as Export Surge Outpaces Imports

Key points

• September trade surplus reached $133.5 billion, the second-highest monthly figure in history, trailing only January 2025.
• Exports grew 36.3% year-on-year, the fastest pace since July 2010, reaching a record $447.2 billion.
• Imports rose 31% year-on-year, driven largely by higher oil costs, while consumer goods imports remained sluggish.
• The renminbi has fallen over 14% in inflation-adjusted terms since March 2022, boosting export competitiveness.
• Retail car sales in China plunged 28% year-on-year, highlighting a stark contrast between weak domestic demand and booming exports.

Background

This surge follows a period of strong export growth in August, where trade data showed exports up 25% and imports up 28.2%. Recent diplomatic efforts, including a trade truce extension with the US and an agreement with the EU to halve hybrid car exports, have helped stabilize trade relations. However, domestic challenges persist, including a prolonged housing market crash and rising unemployment, which have kept consumer spending low despite government stimulus measures.

How outlets are covering it

The New York Times emphasizes the role of a weak currency and broad tax breaks for exporters in driving the surplus, noting that Beijing is reluctant to cut these incentives due to fears of job losses. CNBC highlights the impact of global demand for AI-related goods, such as integrated circuit boards, and notes that exports to the US grew nearly 39.6%. Both outlets agree that domestic demand remains weak, but the NYT focuses on the structural issues of a housing crash and unemployment, while CNBC points to the stabilization of US-China trade tensions as a key factor in the export surge.

Why it matters

China’s record trade surplus underscores the resilience of its manufacturing sector but highlights deep structural imbalances. The reliance on exports to drive growth, coupled with weak domestic consumption, risks exacerbating trade tensions with partners like the US and EU. The weak currency and tax incentives, while boosting exports, may not be sustainable in the long term and could lead to further geopolitical friction.

What to watch

China is expected to exceed its previous annual trade surplus record of $1.19 trillion. The EU and China have agreed to halve hybrid car exports, which may ease tensions but could also limit future export growth. Beijing is likely to maintain its current policy stance, avoiding sharp currency appreciation or tax cuts, to protect jobs and stabilize the economy. However, the weak domestic demand and rising raw material costs may force a reassessment of these policies in the coming months.