China logs $1.04 trillion trade surplus through October

October imports rose 41.6%, outpacing exports and narrowing China’s monthly surplus

Official data released Tuesday by China’s customs agency showed exports surging 35.2% in October from a year earlier. Exports had grown rapidly during the year, supported by high-tech goods such as semiconductors and automobiles. Imports rose 41.6% over the same period, and the faster import growth narrowed the monthly trade surplus to $105.3 billion from $133.5 billion in September.

China’s trade surplus totaled $1.04 trillion from January through October, keeping the country on track to surpass last year’s record $1.2 trillion. The figure meant China’s surplus had exceeded $1 trillion for a second consecutive year, amid mounting pressure for greater balance in trade with Beijing.

Dave Chia, an economist at Moody’s Analytics, said, “We expect Chinese exports to stay strong for the rest of this year, led by electronics and autos.”

Alicia García-Herrero, chief economist for Asia Pacific at French bank Natixis, said overcapacity across many industries, excess domestic savings and weakened domestic demand were still forcing China to ship goods abroad as some countries moved to protect their own industries. “The situation is not sustainable,” she said.

Top Chinese officials insisted that Beijing was not seeking to expand the trade surplus and instead wanted more balanced global trade. Trade curbs by the European Union pose an important risk at a time of heightened U.S. trade barriers and tariffs, Chia said.

China’s exports could be vulnerable to setbacks for the artificial intelligence industry, a concern that deepened with the Democratic victories in the U.S. midterm elections given the public backlash against expansion of data centers. “If the AI boom slows or turns into a correction, lower chip and electronics prices and smaller shipping volumes would hit China’s exports hard,” Chia said.

Cinders Zhou, who sells eyewear for a manufacturer in Linhai city in eastern China’s Zhejiang province, said businesses were feeling the pressure of ferocious competition as China’s economy has slowed. Zhou’s company makes frames and lenses sold both in and outside China. “It comes down to product quality, or rather the increasingly the lack of it across the industry, since there’s significant homogenization,” she said. “That has forced everyone to compete on price,” she said.

Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, an industry group, said U.S. and European trade policies added “a lot of difficulties” for Chinese businesses seeking to expand in those markets.

Trade is among the top issues likely to be on the agenda for planned meetings between U.S. President Donald Trump and Chinese leader Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation leaders summit later this month in China’s technology hub Shenzhen. A two-month extension of a trade truce until January has provided some relief to exporters, though it was unclear how long that relief would last.

Strong exports have helped offset sluggish domestic demand, and China’s economy is forecast to meet Beijing’s official target of 4.5% to 5% annual growth this year, slightly slower than last year’s 5% expansion.