China’s trade surplus is on track to hit a record high this year, putting it increasingly on a collision course with some of the world’s biggest economies and, inevitably, provoking President-elect Donald Trump. According to Bloomberg, the gap between China’s exports and imports could approach a staggering $1 trillion if it continues to widen at the same pace. In the first ten months of the year, this surplus has already climbed to $785 billion—its highest level on record for that period and up nearly 16% from 2023. It’s the tale of an economy once again fuelled by exports.

China is leaning heavily on exports to counterbalance weak domestic demand—a shortfall Beijing has been attempting to address with a series of stimulus measures—and this imbalance is raising hackles globally. The Trump administration is expected to respond with tariffs aimed at curbing China’s exports to the U.S., and other countries from South America to Europe have already slapped duties on Chinese goods such as steel and electric vehicles.

Foreign companies are also pulling back their investments from China. Foreign direct investment (FDI) commitments declined over the year’s first nine months. Should this trend persist through year-end, it would mark China’s first annual net outflow of FDI since at least 1990.

China’s exports have improved markedly in recent years, but weak economic growth, increasing electrification, and a preference for domestic alternatives over foreign goods have dampened import demand. October’s trade result marked the third-largest surplus on record, just shy of the June high. The trade surplus, calculated in yuan, reached 5.2% of nominal GDP over the first nine months, the highest level since 2015 and well above the last decade’s average.

According to recent data, the trade imbalance with the United States has grown by 4.4% year-to-date compared to the same period last year. Meanwhile, the surplus with the European Union has risen by 9.6%, and with the ten ASEAN nations, it has surged nearly 36%.
Imbalances are also widening with many other countries. China now exports more goods to nearly 170 countries and economies than it imports from them—the most since 2021.

A currency war may also be on the horizon. India’s central bank has stated it is ready to let the rupee weaken if China allows the yuan to depreciate to offset U.S. tariffs. A devalued yuan would make Chinese exports cheaper and could widen China’s surplus with India, which already stands at $85 billion year-to-date, up 3% from 2023 and more than double the level five years ago.

With such mounting trade tensions, we may be in for a turbulent period in global trade dynamics—one in which China’s record-breaking surplus will undoubtedly play a starring role.