In the first eleven months of 2025, China recorded a trade surplus of approximately US$1.08 trillion.
This is the highest surplus ever recorded in the modern global economy and marks the first time a major economy in peacetime has exceeded the threshold of one per cent of the world’s gross domestic product in trade surplus.
In November, the monthly surplus reached about US$111 billion, with export growth of almost six per cent year-on-year and minimal import growth, below two per cent.
This figure requires careful analysis – not as evidence of exceptional competitiveness, but as an indicator of a structural imbalance within the Chinese economy and an increasingly open conflict between China’s export model and the existing rules of international trade, which are no longer suited to an economy where a single power accumulates a surplus of this magnitude.
China is no longer growing due to accelerating domestic consumption and investment. It increasingly functions as an exporter of surplus – surplus production capacity, surplus savings, and surplus industrial output that lacks sufficiently strong domestic demand.
Three interrelated factors underlie this surplus. The first is chronically weak domestic demand. The second is an industrial policy that systematically encourages import substitution and the expansion of export offer.
The third is a changing global environment in which the United States is rejecting the role of a surplus-absorbing market, while the European Union is gradually assuming that position – without a clear political decision to do so.
Weak domestic demand as the main driver of the surplus
The European Central Bank (ECB) states in its analysis that after 2020, Chinese exports and imports, which had moved almost in parallel until the pandemic, diverged.
Exports are growing above the previous trend, while imports are stagnating below the level reached in 2021. This gap is the key generator of today's surplus.
The crisis in the real estate sector, ongoing since 2021, has significantly reduced investment activity and consumer confidence.
The European Central Bank describes this with the classic logic of a "surplus valve"
Local authorities are highly indebted, households save out of fear of future expenses, and real expenditures are limited by an underdeveloped social protection system.
China's household consumption still contributes significantly less to the gross domestic product compared to developed economies.
Therefore, production sustains growth without sufficient domestic absorption. The surplus necessarily spills over into foreign markets.
The European Central Bank describes this with the classic logic of a "surplus valve", in which exports become the only outlet for industrial capacities that the domestic economy cannot absorb.
Industrial policy and systematic import substitution
The second pillar of China’s surplus is its long-standing industrial strategy. Strategic sector development programmes have led to a strong increase in domestic participation in value chains.
China now produces most of the components it once imported, particularly electric vehicles, batteries, solar panels, industrial machinery, and so-called “legacy” semiconductors – older but essential chips used in cars, energy, and medical equipment.
There is no simple substitute for Chinese goods without substantial investment in their own capacities
This surplus is not concentrated on low-value goods. On the contrary, a significant part of the surplus comes from technologically complex and capital-intensive sectors.
This further complicates adaptation for trading partners, as there is no simple substitute for Chinese goods without substantial investment in their own capacities.
Changing geography of trade: Europe as a new absorption zone
One of the most important developments is the shift in the geography of Chinese exports.
While the United States, under high tariffs and political pressure, has reduced imports of Chinese goods, the European Union has become the main market for redirected exports.
In November 2025, China’s exports to the United States fell by approximately 29 per cent compared to the same month the previous year.
At the same time, exports to the European Union increased by almost 15 per cent, while shipments to Southeast Asia, Africa, and Latin America also grew.
The European Union relied on a strategy of “de-risking”, seeking to reduce dependence on certain sectors without open trade conflict
The European Chamber of Commerce in China warns that the trade imbalance between the European Union and China is rapidly deepening.
The ratio of shipping containers, which in 2019 was approximately one-to-2.7 in favour of China, is now about one-to- four.
In other words, Europe is increasingly functioning as a market that absorbs China’s surplus, without equivalent growth in its own exports.
For years, the European Union relied on a strategy of “de-risking”, seeking to reduce dependence on certain sectors without open trade conflict.
However, the scale of China’s surplus now calls that strategy into question. It is no longer about individual industries but about a systemic shift in global trade.
The position of the International Monetary Fund
The International Monetary Fund (IMF) is unusually blunt in its annual report on China. Although it has raised the growth forecast for 2025 to around five per cent, the IMF emphasises that surpluses of this magnitude cannot sustain such growth in the long term.
According to the Fund, China is "too big to continue seeking growth through exports."
The IMF estimates that net exports will contribute more than one percentage point to overall growth in 2025, a high and potentially destabilising share for the world's second-largest economy.
The IMF is saying that some of the adjustment must happen within China, not through deepening trade imbalances with the rest of the world
The IMF indicates that adjustment must occur within the Chinese economy through greater reliance on domestic consumption, increased social spending, recovery from the crisis in the real estate sector, and a gradual shift of the exchange rate to a more realistic level.
In essence, the Fund is saying that some of the adjustment must happen within China, not through deepening trade imbalances with the rest of the world.
A European dilemma without an easy solution
For Europe, China's surplus is not an abstract macroeconomic problem but a political issue with direct consequences.
Cheaper Chinese goods are helping to control inflation but at the same time are increasing pressure on European industry - BYD Dusseldorf
Cheaper Chinese goods are helping to control inflation but at the same time are increasing pressure on European industry, which is already facing high energy costs and a weak investment cycle.
European institutions have launched a series of investigations into subsidies and dumping in sectors such as electric vehicles and renewable energy sources.
However, partial measures are unlikely to address a structural surplus of this scale. European companies face a choice between diversification of supply chains, which is expensive and slow, and deeper integration into Chinese production flows, which increases long-term dependence.
Broader implications for global trade
China's trade surplus of more than a trillion dollars raises an issue that goes beyond Beijing's relations with individual partners. The global trading system only functions if there is a balance between economies that produce a surplus and those willing to absorb it.
If the United States refuses that role, and Europe is not politically ready to assume it permanently, a period of instability will inevitably follow.
A Chinese surplus of this size cannot last without destabilising international trade
A Chinese surplus of this size cannot last without destabilising international trade. In the absence of a correction within the Chinese economy, political pressure in Europe and other importing economies will lead to increasingly aggressive forms of market protection.
In other words, adjustment will occur – the only question is whether it will be through internal changes in China or external barriers imposed by its trading partners.
A Chinese trade surplus of this magnitude has immediate political and economic consequences. It influences government decisions, shapes the industrial policy of trading partners, and prompts a review of the existing rules of international trade.
The surplus of over one trillion dollars does not reflect the stability of China's growth model, but rather the extent of the imbalances that model produces – both within China itself and in its relations with the rest of the world.
