China closed 2025 with a record trade surplus of about $1.19 trillion, highlighting a major shift in global trade as exporters increasingly turned away from the United States toward faster-growing markets in Africa, Southeast Asia, and Latin America.
Chinese customs authorities reported the milestone on Wednesday, despite renewed trade pressure from the administration of US President Donald Trump, reigniting debate over the sustainability and implications of China’s export-led growth model.
The surplus, roughly equal to the annual economic output of a top-20 economy like Saudi Arabia, was fueled by strong export growth to non-US markets.
For years, Chinese policymakers have encouraged manufacturers to diversify away from the world’s largest consumer economy. That strategy now appears to be paying off, even as geopolitical tensions with Washington continue.
“China’s economy remains extraordinarily competitive,” said Fred Neumann, chief Asia economist at HSBC.
He noted that productivity gains and rising technological sophistication among Chinese manufacturers have supported exports, while weak domestic demand and excess capacity have also played a role.
Outbound shipments from the world’s second-largest economy rose 6.6% year on year in December, accelerating from November and far surpassing market expectations.
Imports also grew 5.7%, signaling pockets of resilience even as China contends with a prolonged property downturn and cautious consumer spending.
Africa and Southeast Asia emerged as China’s new export engines. Exports to Africa jumped 25.8% in 2025, while shipments to the Association of Southeast Asian Nations rose 13.4%.
Sales to the European Union also grew by 8.4%, helping offset a sharp decline in US-bound trade.
Exports to the United States fell 20% in dollar terms last year, while imports from the US declined 14.6%, reflecting the effects of tariffs and political friction since Trump returned to the White House.
Yet China’s overall trade performance indicates that Washington’s influence has weakened as Beijing strengthens ties with emerging markets seeking affordable manufactured goods and infrastructure-related inputs.
“With more diversified trading partners, China’s ability to withstand risks has been significantly enhanced,” said Wang Jun, a vice minister at China’s customs administration, during a briefing on the data.
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The monthly figures underscore the scale of the shift, with China posting trade surpluses exceeding $100 billion in seven months of 2025, compared with only one month in 2024.
A relatively weak yuan helped boost competitiveness, but analysts say the broader story is one of strategic realignment rather than currency moves alone.
“Strong export growth helps to mitigate the weak domestic demand,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that authorities are likely to maintain broadly unchanged macroeconomic policies in the near term.
Markets reacted calmly, with the yuan steady and Chinese equities advancing, reflecting investor confidence that exports can continue to anchor growth.
However, economists caution that the strategy carries risks, as more countries raise concerns about overcapacity and the impact of cheap Chinese goods on local industries. While diversification shields Beijing, it also intensifies global tensions.
Looking ahead to 2026, China faces mounting pressure to manage these concerns without undermining growth. Rising trade surpluses could strain relations with partners reliant on manufacturing exports, particularly in parts of Asia, Africa, and Europe where industrialization remains a political priority.
China’s handling of strategic commodities has also drawn attention. Rare-earth exports surged to their highest level in more than a decade, even as Beijing imposed restrictions on certain elements starting in April.
Analysts view this as a reminder of China’s leverage in sensitive supply chains amid ongoing negotiations with Washington over agriculture, aviation, and technology.
The world’s largest agricultural importer purchased a record volume of soybeans in 2025, mainly from South America, as Chinese buyers scaled back purchases from the US for much of the year.
This shift highlights how trade tensions are reshaping global commodity flows, affecting farmers and exporters worldwide.
Meanwhile, Chinese firms are increasingly setting up overseas production hubs in Southeast Asia and parts of Africa to access lower-tariff markets in the West.
This trend is expected to help China continue expanding global market share, especially in electronics and other price-sensitive goods.
Beijing has shown some awareness of the political backlash its export surge is generating. Last week, authorities removed export tax rebates for the solar industry, a long-standing source of tension with the European Union.
In Washington, the trade challenge shows little sign of easing. Trump has floated new tariff threats related to Iran, raising the prospect of renewed friction with Beijing, Tehran’s largest trading partner.
As Zichun Huang, a Chinese economist at Capital Economics, noted, such moves underscore the persistent risk of escalation even as China’s trade network continues to broaden.
For African and Southeast Asian economies, China’s export boom presents both opportunities and challenges, providing access to affordable goods and investment while intensifying competition for local producers.
Globally, the data signals a shift in trade power, with Beijing increasingly able to withstand US pressure by leaning on the rest of the world.
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Image Credit: Business Insider Africa
