Rising concerns in the US and Europe over China’s record global trade surplus of more than USD 1 trillion are unlikely to prompt Beijing to rein in exporters for the foreseeable future, experts say.
Official data released this week showed China’s surplus for the first 11 months of the year already hit USD 1.07 trillion. This should be a “wake-up call” to China’s trading partners that “the arsenal of current trade remedies and rules are not working,” said Wendy Cutler, senior vice president of the Asia Society Policy Institute.
While the focus this year has been on US President Donald Trump’s tariffs, under which China’s US-bound shipments have fallen sharply, the European Union (EU) is shaping up to be the next battleground. French President Emmanuel Macron told domestic media that he warned President Xi Jinping during his recent visit to China that if Beijing fails to address the trade imbalance, the EU “will be forced to take measures in the coming months.”
Over the past five years, China’s export surge has been driven by both pandemic side effects and advancements in domestic manufacturing. Rising inflation and interest rates in other countries have boosted demand for low-priced Chinese goods, while Beijing’s industrial push—including its “Made in China 2025” strategy—and vast supply chains have reinforced its manufacturing edge. Deflation within China since mid-2022 has further enhanced exporters’ competitiveness.
Jin Keyu, a professor of finance at the Hong Kong University of Science and Technology, told Nikkei Asia that the surplus “is not just a trade issue.” She said it is important to recognize that it is also a result of China’s exceptionally high household savings rate, while investment has grown more slowly.
So while consumption-spurring measures could be one way to reduce it, “China’s strategic direction going forward is focused on consolidation, integration, optimization, and efficiency. This is aimed at addressing overcapacity problems stemming from excessive competition. Domestically, that also means fewer subsidies and less emphasis on scale, which should help alleviate some of these issues,” Jin said.
Yet she also called overcapacity itself “a misleading concept.” China is providing developing countries abundant, affordable, high-quality renewables, and other technologies, benefitting the world, she said. “For example, there is no worldwide overcapacity in [electric vehicles],” she said, echoing arguments Beijing itself has made in downplaying worries in Europe and elsewhere about an influx of inexpensive Chinese EVs.
While China’s domestic demand remains lackluster, the trade surplus is expected to help Beijing meet its official growth target, which is “around 5%” for 2025. Many economists anticipate that officials will set a similar goal for 2026 to boost confidence.
On December 8, the Chinese government’s 24-member Politburo held a meeting and signaled concern over slower growth since the middle of the year, referring to “counter-cyclical” policy adjustment, which describes efforts to stabilize the economy and had been absent from July’s Politburo meeting. State news outlet Xinhua’s account of the discussions also reintroduced “trade struggles,” an indication that Beijing might be expecting flare-ups in trade friction.
Lu Ting, a managing director and chief China economist at Nomura, said, “We especially believe the rising trade imbalance with Europe will trigger rounds of trade tensions which have so far been underestimated by markets.”
The EU is particularly anxious over China’s EV exports. In 2024, China churned out 12.4 million EVs, representing more than 70% of global output, while Europe produced about 2.8 million and North America made 1.8 million, according to the International Energy Agency.
“The USD 1 trillion in trade surplus is a real concern, not just in Europe but in many other countries, that the competitiveness of Chinese products are pushing out domestic manufacturers or even hindering domestic manufacturing to get off the ground, leading to underperformance in terms of economic growth, but perhaps also job losses,” said Jens Eskelund, president of the EU Chamber of Commerce in China (EUCCC).
The chamber said the EU’s trade deficit with China is expected to exceed EUR 400 billion (USD 470 billion) this year.
Wu Xinbo, dean of the Institute of International Studies and director of the Center for American Studies at Fudan University, called the unprecedented surplus a “pleasant surprise” amid China’s trade tensions with the US and Europe. He said the strong export momentum should continue for some time due to the “competitiveness of the exported goods.”
“If the European Union takes further measures, including imposing additional tariffs, China will simply continue to negotiate, while also taking some countermeasures, such as not buying Airbus [planes],” Wu said.
“And since relations with the US have improved, we can buy [from] Boeing instead,” he added, referring to the trade truce struck by Trump and Xi at the end of October.
Wu emphasized that it is unlikely for Beijing to instruct its producers to export less, as exports are driven by market forces, while it is also highly improbable that China would restrict export pricing, given its production cost advantages over Europe.
To manage tensions, Wu suggested, “I think what China can do is appropriately increase imports from Europe, if Europe has suitable products, including both goods and services, as well as increasing investment in Europe.”
EUCCC’s Eskelund suggested that allowing the yuan to appreciate would also help ease the tensions, while at the same time putting money back in Chinese consumers’ products by making imports cheaper. “China can continue exporting an ever-increasing volume of goods to Europe,” he cautioned, “but doing so risks further backlash.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.