At the start of December, China stunned the world when it reported that its trade surplus had surpassed a record $1 trillion, with one month still left to go in calendar 2025.
Fast forward to last night when China reported that in December, its trade balance rose from $112 billion in November to a whopping – and the second highest on record – $114.14 billion, matching Bloomberg estimates…
… exports grew 6.6% YoY in dollar terms, more than double the average forecast from a Bloomberg poll of analysts of 3.1% and greater than November’s growth rate of 5.9%, while imports rose 5.7% in dollars last month on a year earlier, also far outpacing analyst expectations of 0.9% growth and the previous month’s figure of 1.9%.
Adding across, China’s full-year trade surplus exceeded $1 trillion for the first time – $1.2 trillion to be precise – blowing away last year’s figure of $993bn despite exports to the US falling 20%, as those to the EU rose 8.4% and to south-east Asia rose 13.4%, where as we show below the bulk of transshipments to the US take place, as Chinese producers diverted shipments to other markets while ultimately still targeting US consumers.
And since China’s record $1 trillion trade surplus hit a month earlier had already outraged its trading partners, who finally called out Beijing (long after Trump did so first) for its mercantilist, imbalanced trade policies, Beijing needed a scapegoat for the even bigger number it reported. It decided to blame the US, the one country that until recently had reportedly “alienated the world” in its pursuit of more balanced Chinese trade.
As the FT reported, “China blamed the US for growing global trade imbalances as the world’s second-biggest economy reported a record full-year trade surplus of $1.2tn for 2025 despite President Donald Trump’s trade war.”
Why? Because as we first reported last month, China’s gargantuan surplus will further inflame global trading tensions, particularly with the EU where China is indiscriminately dumping cars below cost and singlehandedly putting the entire German auto industry into an early grave; it’s not just Europe – all export-focused developing countries are also seething, as they find their exports are simply not competitive with cheap Chinese goods which are being dumped at a furious pace around the globe.
YIKES
China just posted a record-breaking $1.2 trillion global trade surplus. The EU’s is up 18.1%. Germany’s numbers are BONKERS – a staggering 108% surge in surplus, meaning that it now accounts for nearly a third of China’s entire EU surplus.
The US has been aggressively… https://t.co/ikpiHIiADr
— Melissa Chen (@MsMelChen) January 14, 2026
In a sign of the growing decoupling of direct trade between China and the US, the American share of Chinese exports last year was 11.1% , down from 14.7% in 2024, some of the lowest levels since the 1990s, the FT reports. Of course, that is woefully inaccurate at worse, and at best incomplete, since China has merely redirected its US goods via intermediary countries – i.e., transshipments – such as Vietnam, which has seen imports from China soar to a record high.
And since Vietnam didn’t grow an affluent middle class overnight, all that is happening is China is sending its trinkets to Hanoi first, before they are reshipped onward to China, under the guise of Vietnamese exports.
But, as last month, the loudest complaints about China’s surplus are expected from the EU (which said nothing when Trump was complaining loudly over the past decade and now is stuck with a crippled economy which has lost all export vibrancy for ever), yet which is terrified of its own shadow, and still has to follow the US and implement broad-based tariffs. Instead, the bloc has called for Beijing to stimulate domestic demand and reduce its own barriers to manufactured imports, something Beijing – already stuffed to its gills in debt – has shown precisely zero interest in doing, or being able to create organically.
And so, China decided to… blame Trump.
Wang Jun, vice-minister of the General Administration of Customs of China, said on Wednesday that trading partners’ export controls on high-tech products were preventing China from importing more, in not so thinly veiled comments directed at the US. Successive US administrations have imposed stringent curbs on China’s access to high-end semiconductors.
“It should be pointed out that some countries politicize economic and trade issues, using various pretexts to restrict exports of high-tech products to China; otherwise, we would import more,” said Wang, adding: “There is vast room for import growth.”
Actually no, there isn’t, because as the upcoming Chinese data dump will reveal, China’s domestic economy continues to deteriorate with retail sales and fixed investment at a level that signals flat GDP at best, if not negative.
Which only leaves a flood of exports to keep China’s economy alive. Sure enough, economists have warned that China’s economy is too reliant on manufacturing and exports for growth amid anaemic domestic consumption and a years-long property sector slowdown.
“China’s staggering trade surplus is simultaneously a symbol of its exporting prowess and the weaknesses in its growth model,” said Eswar Prasad, professor of economics at Cornell University.
One more point: China’s staggering trade surplus is a remnant of an era in which nobody dared point out that the neoliberal, mercantilist emperor is dead, until Trump came along. And while Europe laughed at him at first (just like they laughed when he told Germany they are entirely reliant on Russian gas), Brussels has finally figured out that it can do nothing and watch its economy implode from inside while purchasing cheap Chinese trinkets, or it can join the US president in calling out China’s trade practice. At which point China’s record trade surplus will collapse, with various unpleasant consequences for its economy. As for the US, it is on the right path, but it too needs to plug the gaping loopholes such as record trans-shipments through Vietnam and other Pacific rim countries. Once it does that, only then will Beijing be forced to finally revise its export-led model which is the main reason why the world finds itself in a brutal trade war for the second year running.
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