China's trade surplus tops $1 trillion as AI-driven exports surge

China's trade surplus surpassed $1 trillion in the first ten months of the year, helped by a global push to build AI infrastructure that boosted sales of high-tech products and offset weak domestic demand. The rise comes ahead of next week’s Asia-Pacific Economic Cooperation summit in Shenzhen, where Chinese President Xi Jinping and US President Donald Trump are slated to meet for the third time this year, putting trade and tariff policy in the spotlight.

Exports jumped 35.2% in October from a year earlier, slightly slower than September’s 36.3% increase but above economists’ forecast of 33.5%. The surge lifted the trade surplus to $1.04 trillion, marking a second consecutive year the surplus topped $1 trillion and reaching the milestone a month earlier than in 2025.

Analysts note that while the AI investment boom is expected to keep demand for Chinese technology products strong through 2027, deeper reliance on overseas markets could expose China to protectionist measures. "The risk of additional tariffs and other trade barriers will remain elevated in 2027, particularly as Chinese manufacturers continue expanding their presence in overseas markets," said Joe Peissel, lead macroeconomist at Trivium China.

China's trade surplus with the United States narrowed to $32.71 billion in October from $34.01 billion the month before, though the overall imbalance continues to be a source of friction between the two largest economies. Beijing and Washington on Monday formally extended by two months a trade truce that had been due to expire on Tuesday, with China saying any increase in US farm-goods purchases would depend on reciprocal tariff reductions.

Imports rose 41.6% in October from a year earlier, beating the 32% increase forecast in a Reuters poll. Rare-earth exports edged higher, and crude oil imports reached their highest level since March as buyers adjusted to Middle-East supply disruptions. "The contraction in rare-earth export volumes eased last month, suggesting that China may have begun to relax enforcement of some export controls," said Nguyen Hoang Nam, China economist at Capital Economics.

Domestic consumption remains subdued, constrained by a prolonged property slump that has eroded household wealth and confidence. This has pushed Chinese automakers to seek overseas sales, with car exports maintaining solid growth while domestic vehicle sales fell for a 12th consecutive month. Analysts caution that greater reliance on exports could make the economy vulnerable to a slowdown in global demand once the AI investment cycle matures. "We may see trade growth moderate next year, given the base effect," said Lynn Song, chief economist for Greater China at ING. "But AI-related trade is expected to remain strong in the months ahead despite recent equity market volatility."