China’s trade surplus topped $1 trillion in the first 10 months as the global race to build AI infrastructure boosted sales of high-tech products and helped offset weak domestic demand, a dynamic likely to exacerbate tensions with major trading partners.
The figures highlight Beijing’s growing reliance on foreign demand to support an economy hobbled by subdued consumption and a prolonged real estate crisis. But even as the global AI investment boom is expected to maintain strong demand for Chinese technology products through 2027, it risks worsening domestic imbalances and fueling trade frictions with partners, notably the European Union.
Exports rose sharply by 35.2% in October compared to the same month last year in U.S. dollar terms, customs data showed on Tuesday, only slightly slower than September’s 36.3% rise, but higher than economists’ forecasts of a 33.5% increase.
This helped push China’s trade surplus to $1.04 trillion in the first 10 months, surpassing $1 trillion for the second year in a row and reaching the milestone a month earlier than in 2025.
The growing surplus could fuel further tensions with the European Union, where leaders have called for more trade restrictions with China after reaching a deal with Beijing to limit Chinese exports of hybrid vehicles to the European Union over the coming years. As the measures have not yet taken effect, factories are expected to bring forward their deliveries, which will boost exports in the short term.
China officially announced on Monday the two-month extension of the trade truce with Washington which expires on November 10, but said last week that its increased purchases of American agricultural products would depend on the implementation of the agreed reciprocal tariff reduction agreement.
“The risk of additional tariffs and other trade barriers will remain high in 2027, especially as Chinese manufacturers continue to expand their presence in overseas markets,” said Joe Peissel, senior macroeconomist at Trivium China.
Imports rose 41.6%, beating the median forecast of a 32% increase in the Reuters survey and an acceleration from September’s 31% growth.
The Asia-Pacific Economic Cooperation summit will take place next week in Shenzhen, southern China’s technology and innovation hub, where Chinese President Xi Jinping and U.S. President Donald Trump are expected to meet for the third time this year.
Headwinds and uncertainties
One of Beijing’s main concerns is that consumers remain reluctant to spend, constrained by a slowdown in the property market that has dented household wealth and shaken confidence in the economic outlook.
Weak domestic demand has pushed Chinese automakers to seek sales in overseas markets. China’s auto exports maintained a solid pace of growth in October, while domestic vehicle sales recorded a 12th consecutive month of decline, according to separate data released by an industry association.
However, greater dependence on exports leaves China’s economy increasingly exposed to any slowdown in global demand.
Much of the strength in exports this year has been fueled by a global drive to develop AI infrastructure.
“Export prospects depend on how long the AI boom lasts,” Macquarie analysts write. They expect Chinese exports to accelerate further in the fourth quarter before starting to slow from the first quarter of 2027.
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