China’s exports surged at their fastest pace in two years this October, as factories increased shipments to key markets to counter new tariffs from the United States and European Union and the looming risk of a two-front trade war.
The recent victory of Donald Trump, who has pledged to impose tariffs exceeding 60 percent on Chinese imports, is likely to lead to a buildup of stockpiles in China’s top export markets.
Trump’s tariff threat has unsettled Chinese factory owners and officials managing exports worth approximately $500 billion annually. Tensions are further strained by trade issues with the EU, which purchased $466 billion of Chinese goods last year.
While domestic confidence remains impacted by a persistent property market debt crisis, export momentum offers a bright spot for China’s struggling economy.
Exports from the world’s second-largest economy rose by 12.7 percent year-on-year last month, surpassing a 5.2 percent increase forecasted by Reuters economists and a 2.4 percent rise in September. However, imports fell by 2.3 percent, against predictions of a 1.5 percent decline, marking the first negative import growth in four months.
China’s trade surplus climbed to $95.27 billion in October, up from $81.71 billion in September.
“We anticipate a wave of front-loading into Q4 before pressure mounts in 2025,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “This is largely due to Trump’s tariff threat, which is becoming increasingly realistic.”
The ‘Trump effect’ on exports
China’s exports to the U.S. increased 8.1 percent year-on-year in October, while shipments to Europe rose by 12.7 percent over the same period.
“We expect exports to remain strong in the coming months,” said Zichun Huang, China economist at Capital Economics, in a note. He added that the impact of Trump’s tariffs may not materialize until late next year.
Huang noted that Trump’s return could prompt U.S. importers to step up purchases to bypass potential tariffs, offering a short-term boost to Chinese exports.
China’s top exports to the U.S. last year included smartphones, tablet computers, and video game consoles. Similar to Trump’s initial term, Chinese electronics makers may once again be a target.
Yet, signals indicate waning demand for these goods. Trade data from South Korea and Taiwan points to slowing global demand, and German producers report declining interest from overseas buyers, suggesting that Chinese producers may be cutting prices or moving inventory out of China to attract buyers.
An official survey of factory activity in October showed Chinese factories struggling to secure overseas buyers.
“If the PMI new export sub-index is dropping while the export numbers are rising, it’s clear this is an inventory adjustment,” said Dan Wang, a Shanghai-based Chinese economist.
Rising rtocks and weak yuan boost exports
Chinese and Hong Kong stocks rose on Thursday, buoyed by investor optimism over potential stimulus measures, while the yuan rebounded from a three-month low against the dollar. Analysts note that the weak yuan may have fueled export growth, though it simultaneously raised import costs.
China’s imports from the European Union and Southeast Asia fell by 6.1 percent and 7.3 percent year-on-year last month, while Japanese imports continued to rise. Notably, crude oil purchases—from the world’s largest oil importer—dropped by 9 percent, marking the sixth consecutive month of decline on an annual basis.
Zhou Maohua, a macroeconomic researcher at China Everbright Bank, attributed the decline in import growth to weak domestic demand and low import prices.
Conversely, China’s soybean imports surged last month, as U.S. grain exporters raced to meet demand in China ahead of the U.S. election.
Economists warn against over-reliance on exports
Amid these challenges, economists urge Beijing to avoid over-reliance on exports for growth, recommending more economic stimulus to stabilize the economy.
ANZ analysts forecast a policy response involving monetary measures and other strategies to mitigate Trump-era tariff pressures.
“Authorities may also implement measures to cushion the tariff impact, such as subsidies or better access to financing,” said Raymond Yeung, ANZ’s chief economist for Greater China. He added that policy initiatives could also focus on domestic consumption campaigns and diversifying export markets within Belt and Road countries.
