In a historic economic milestone, China’s trade surplus surpassed USD 1 trillion in the first 11 months of 2025, marking the first time in global history that a country has achieved such a figure. By comparison, in 2024, nearly 160 countries worldwide recorded a Gross Domestic Product of less than USD 1 trillion. The milestone is all the more remarkable given that China accomplished it amid an ongoing trade war with the United States, its largest export market, and despite tariffs imposed by former US President Donald Trump.
At first glance, this achievement signals Beijing’s dominance in global trade. However, experts caution that while China’s export prowess is undeniable, the massive surplus may be less a triumph than a reflection of deeper structural vulnerabilities.
Trump’s tariffs, intended to reverse the US trade deficit with China, largely failed to alter the broader trajectory of the global economy. Rather than curbing Chinese exports, the tariffs redirected them. Chinese goods increasingly flowed to Europe and ASEAN countries, with some products reaching the US indirectly via third-party nations. In effect, the tariffs reshaped trade routes rather than halted China’s rise as the world’s factory.
The USD 1 trillion trade surplus is historic. By contrast, in 2024, only 19 countries worldwide had a GDP exceeding USD 1 trillion. The world is simultaneously awed and apprehensive, with economists warning that such trade imbalances are unsustainable.
China’s ascent as a global export powerhouse is ironic. It was the United States that laid the foundations for Beijing’s manufacturing dominance. In the late 1970s, the US sought a strategic detente with China to counter the Soviet Union during the Cold War. Over the following decades, Washington facilitated China’s industrial growth, providing technology, investment, and market access. By the 1980s and 1990s, millions of low-wage manufacturing jobs migrated from the US to China, driven by high labor costs and environmental regulations in the West.
China’s trade surplus grew incrementally. In 1995, the country registered a modest USD 11.96 billion surplus. By 2005, the figure had surged to USD 124.6 billion, and by 2015, it reached USD 358.8 billion. Within a decade, it nearly tripled again, culminating in the historic USD 1 trillion milestone in 2025. The US trade deficit with China mirrors this trend: USD 33.78 billion in 1995, USD 202.27 billion in 2005, USD 367.32 billion in 2015, and USD 418 billion in 2018. Despite a slight decline in 2025, the US remains China’s most significant export destination.
So how has China expanded its trade surplus even as exports to the US decline? The answer lies in diversification. Chinese shipments to the US fell 29% year-on-year in November 2025, yet exports to the European Union rose 14.8%, shipments to Australia surged 35.8%, and Southeast Asian economies imported 8.2% more goods. China’s export resilience reflects both its industrial capacity and its strategic pivot to alternative markets.
Yet, China’s trade dominance comes with caveats. Beyond product competitiveness, many industries benefit from state subsidies, sometimes aimed explicitly at eliminating foreign competition. Rare-earth mining, electric vehicles, batteries, and solar panels illustrate Beijing’s ability to gain monopolistic advantages. Coupled with the manipulation of the Yuan exchange rate, which keeps Chinese goods artificially cheap abroad, these measures highlight systemic advantages rather than purely market-driven competitiveness.
The sustainability of China’s export-driven model is increasingly questioned. Economist Eswar Prasad noted in the Financial Times that post-COVID growth relies heavily on credit-fuelled investment, despite a shrinking workforce, weak domestic consumption, falling property prices, and low consumer confidence. The resulting imbalance—high factory output paired with limited domestic demand—renders exports China’s primary economic lifeline.
China’s economic practices are also reshaping regional markets. ASEAN economies, for instance, face potential deindustrialization reminiscent of the US experience in the 1980s and 1990s, as low-cost Chinese goods flood local markets. Globally, there is growing concern that imbalances created by China’s trade surplus are unsustainable. French President Emmanuel Macron warned Beijing in December 2025 that Europe could impose tariffs unless China reduced its trade imbalance. The International Monetary Fund and financial institutions like Goldman Sachs have echoed similar warnings.
Domestically, China’s Communist Party is aware of the risks. President Xi Jinping chaired a Politburo meeting urging cadres to “continuously expand domestic demand” and make consumption the “main driver” of the economy. Yet, these measures remain limited relative to the scale of China’s USD 19 trillion economy and its dependence on exports.
While the USD 1 trillion trade surplus underscores China’s remarkable export capabilities, it is far from unqualified good news. It reflects both Beijing’s strategic economic management and the vulnerabilities inherent in an export-heavy model. Any disruption—whether a global financial crisis, protectionist policies in key markets, or a slowdown in global demand—could destabilize China’s growth trajectory, turning a historic milestone into a precarious economic challenge.
In short, China’s trade triumph is a double-edged sword: a testament to its industrial might and global influence, yet a warning that overreliance on exports may eventually compromise long-term economic stability.
