China trade recap: surplus tops $1 trillion as AI boom powers exports, tensions loom

Strong AI-led exports support Asian tech and supply-chain stocks, adding to today’s regional rebound. The bigger issue is political. A surplus above $1 trillion makes new trade barriers more likely, from the EU in particular, and puts trade at the centre of next week’s Xi-Trump meeting. The rebound in China’s crude imports to the highest since March, as buyers replace disrupted Middle East supply, is a supportive signal for oil demand even as prices ease on Iran de-escalation hopes. The import surge is a modest positive for commodity exporters and the Australian dollar, though weak Chinese consumer demand limits how far that read can be pushed.

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China’s AI-fuelled export machine has pushed the trade surplus past $1 trillion again, which is great for factories and awkward for diplomacy.

Summary:

• China’s October exports rose 35.2% year on year, beating the 33.5% forecast; imports jumped 41.6% against 32% expected
• The January-October surplus reached about $1.04 trillion, topping $1 trillion for a second year and a month earlier than in 2025
• Crude imports fell 13.3% from a year earlier but hit their highest volume since March, as buyers replaced Middle East supply disrupted by the Iran war
• Demand at home remains weak, with domestic car sales down for a 12th month while car exports grew
• Trade friction is in focus: the EU wants more curbs, and Xi and Trump are expected to meet at next week’s APEC summit
• Analysts expect exports to accelerate in the fourth quarter before slowing from early 2027

China’s trade surplus topped $1 trillion in the first 10 months of the year as the global race to build AI infrastructure powered exports of high-tech goods, offsetting weak demand at home and setting up fresh friction with trading partners. Here is a recap of Tuesday’s data and what it means.

Exports rose 35.2% in October from a year earlier in US dollar terms, customs data showed. That was ahead of forecasts for a 33.5% gain and only a touch slower than September’s 36.3%. Imports jumped 41.6%, far above the 32% expected. The import surge narrowed the monthly surplus to about $105 billion, but it still lifted the January-October total to about $1.04 trillion. That is the second straight year above $1 trillion, and the milestone came a month earlier than in 2025.

The surplus with the US eased slightly to about $33 billion from $34 billion in September. Crude oil imports fell 13.3% from a year earlier, although shipments reached their highest level since March as buyers sought supplies after the war on Iran disrupted Middle East flows.

AI demand remains the engine. Much of this year’s export strength has come from hardware for data centres, and FedEx this week added freighter capacity between China and the US aimed squarely at AI infrastructure and semiconductors. Analysts expect exports to accelerate further in the fourth quarter before slowing from early 2027, with the outlook hinging on how long the AI boom lasts.

At home, the picture is weaker. Consumers remain reluctant to spend amid a prolonged property downturn, and domestic vehicle sales fell for a 12th straight month even as car exports grew. That reliance on overseas demand leaves China more exposed to any global slowdown. Chinese stocks have also struggled, prompting Beijing to step up market support after the CSI 300 suffered its worst month in more than a decade in October. Mainland and Hong Kong shares edged higher on Tuesday, while regional tech stocks rallied more strongly.

Trade politics will now take centre stage. China has extended its trade truce with Washington by two months, and Xi Jinping and Donald Trump are expected to meet at next week’s APEC summit in Shenzhen, their third meeting this year. In Europe, leaders have called for more curbs on Chinese goods. Analysts warn the risk of new tariffs will stay elevated into 2027 as Chinese manufacturers keep expanding overseas.