China's trade surplus tops $1 trillion for second straight year as exports jump 35.2% in October

China's export boom, led by semiconductors, electronics and electric vehicles, has pushed its trade surplus past $1 trillion for the second consecutive year. Imports have also surged, driven by AI infrastructure demand and energy purchases amid disruptions linked to the Iran war.

China's customs data showed that the cumulative trade surplus reached $1.04 trillion in the first 10 months of 2026, compared with $964.8 billion during the corresponding period last year. The latest milestone puts Beijing on course to surpass the record $1.2 trillion surplus registered in 2025.

The October export growth, however, moderated slightly from the 36.3 per cent expansion recorded in September, while imports accelerated sharply, indicating stronger demand for overseas goods and industrial inputs.

Why are China's exports surging?

China's export performance has increasingly been driven by its expanding high-technology manufacturing sector, particularly semiconductors, electronics, electric vehicles (EVs) and other advanced industrial products.

Overseas demand for electronic components, raw materials, rare earths and metals has supported shipments, while Chinese manufacturers have continued to expand their presence in international markets.

The artificial intelligence infrastructure boom has emerged as another important source of demand, with Chinese companies benefiting from overseas orders for electronic components and technology-related products.

However, the export boom also reflects structural weaknesses in China's domestic economy.

Weak household consumption, the prolonged property sector downturn and subdued domestic demand have left manufacturers increasingly dependent on overseas markets to absorb their production.

Economists have also highlighted industrial overcapacity, excess domestic savings and intensifying competition as factors pushing Chinese businesses towards exports.

The US-Israeli war with Iran has added another dimension to China's trade and energy import dynamics by disrupting crude oil supplies from the Middle East, increasing shipping risks and putting pressure on global energy markets.

China, the world's largest crude oil importer, has had to navigate disruptions to supplies passing through the strategically important Strait of Hormuz, a critical route for global energy shipments.

Despite these disruptions, China's crude oil imports rebounded in October. The country imported 41.94 million tonnes of crude oil, equivalent to around 9.88 million barrels per day. Daily imports increased 9.4 per cent from September, reaching their highest level since March.

The recovery came even as the conflict continued to disrupt Middle Eastern supplies. Higher energy prices and the need to adjust procurement and supply chains have added to the pressure on China's import bill.

The war has also affected refined petroleum product trade. China's exports of oil products, including gasoline, diesel, jet fuel and fuel oil, fell to 5.18 million tonnes in October from 7.16 million tonnes in September.

Despite the strong export performance, China's monthly trade surplus declined to $105.3 billion in October from $133.53 billion in September.

The narrowing was largely due to imports growing faster than exports, with the 41.6 per cent increase in imports outpacing the 35.2 per cent export growth.

Another factor was the appreciation of the Chinese yuan, which reached a more than four-year high in October following a series of stronger midpoint fixings by the People's Bank of China.

A stronger yuan can make Chinese goods relatively more expensive for overseas buyers and reduce the competitiveness of exporters, although its impact on the dollar value of trade also depends on pricing and currency conversion.

Imports of semiconductors and data centre components were among the biggest contributors to the increase, reflecting growing demand for technology-related equipment.

China's crude oil imports also recovered, while higher energy prices added to the value of overseas purchases.