Reuters – China’s trade surplus surpassed $1 trillion in the first 10 months, as a global race to build artificial intelligence infrastructure boosted sales of high-tech products and helped offset weak domestic demand, a dynamic that is likely to heighten tensions with major trading partners. The figures highlight Beijing’s growing dependence on foreign demand to sustain an economy hit by subdued consumption and a prolonged real estate slump. But while the global AI investment boom is expected to keep demand for Chinese tech products strong through 2027, it risks deepening domestic imbalances and fueling trade frictions with partners, including the European Union. Exports rose sharply 35.2% in October from the same month last year in U.S. dollar terms, customs data showed on Tuesday, only slightly less than the 36.3% rise in September but ahead of economists’ forecast for a 33.5% rise. That helped lift China’s trade surplus to $1.04 trillion in the first 10 months, surpassing $1 trillion for the second year in a row and reaching the milestone a month earlier than in 2025. The growing surplus could fuel further tensions with the European Union, where leaders have called for more trade restrictions with China after reaching a deal with Beijing to limit Chinese exports of hybrid vehicles to the bloc in the coming years. As the measures have not yet taken effect, factories are expected to bring forward shipments, boosting exports in the short term. China officially announced on Monday the two-month extension of a trade truce with Washington that is set to expire on November 10, but said last week that expanding its purchases of American agricultural products would depend on the implementation of their reciprocal tariff reduction agreement. “The risk of additional tariffs and other trade barriers will remain elevated in 2027, particularly as Chinese manufacturers continue to expand their presence in overseas markets,” said Joe Peissel, senior macroeconomist at Trivium China. Imports grew 41.6%, beating the median forecast of a 32% rise in the Reuters poll and accelerating from 31% growth in September. The Asia-Pacific Economic Cooperation summit will be held next week in Shenzhen, the technology and innovation hub of southern China, where Chinese President Xi Jinping and US President Donald Trump are expected to meet for the third time this year. Headwinds and uncertainties A big concern for Beijing is that consumers remain reluctant to spend, constrained by a slowdown in the housing market that has hit household wealth and dented confidence in the economic outlook. Weak domestic demand has pushed Chinese automakers to seek sales in overseas markets. China’s auto exports maintained a solid pace of growth in October, while domestic vehicle sales posted a 12th consecutive month of declines, separate data released by an industry association showed. However, greater reliance on exports leaves the Chinese economy increasingly exposed to any slowdown in global demand. Much of the strength in exports this year has been driven by a global push to expand AI infrastructure. “Export prospects depend on how long the AI boom lasts,” the Macquarie analysts wrote. They expect China’s exports to accelerate further in the fourth quarter before beginning to slow from the first quarter of 2027.
