China’s trade surplus crosses $1 trillion as AI boom drives exports

China’s trade surplus exceeded $1 trillion in the first 10 months of 2026, as strong global demand for artificial intelligence (AI) infrastructure boosted exports of technology products and helped offset sluggish domestic consumption.

Customs data released on Tuesday showed that China’s exports rose 35.2% in October compared with the same month last year, measured in US dollars. Although slightly below September’s 36.3% growth, the increase was higher than economists’ expectations of 33.5%.

The strong export performance pushed China’s trade surplus to $1.04 trillion between January and October. The country crossed the $1 trillion mark for the second consecutive year, reaching the milestone a month earlier than it did in 2025.

The growing surplus highlights China’s increasing dependence on overseas markets to support economic growth. Domestic demand remains weak due to subdued consumer spending and a prolonged property sector downturn that has affected household wealth and confidence.

The global investment boom in AI infrastructure has provided a major boost to Chinese manufacturers. Exports of semiconductors increased 111.1% in value during the first 10 months of the year, while shipments of high-tech products rose 47.9%.

Analysts expect demand for AI-related products to remain strong in the coming months and into 2027. However, they warn that China’s growing dependence on exports could expose its economy to global demand fluctuations and additional trade restrictions.

The expanding trade surplus is also likely to create further tensions with major trading partners, particularly the European Union and the United States.

European leaders have called for additional trade restrictions on Chinese products. The EU and Beijing have also reached an agreement to limit Chinese exports of hybrid vehicles to the bloc over the coming years. As the measures have yet to take effect, manufacturers are expected to accelerate shipments in the near term.

China’s trade surplus with the United States narrowed slightly to $32.71 billion in October, compared with $34.01 billion in September. However, the wider trade imbalance remains a major source of disagreement between the world’s two largest economies.

Washington and Beijing formally extended their trade truce by two months on Monday, just ahead of its scheduled expiry. China has also indicated that any increase in purchases of US agricultural products will depend on the implementation of agreed reductions in reciprocal tariffs.

Meanwhile, China’s imports also recorded stronger-than-expected growth. They increased 41.6% year-on-year in October, compared with a 31% rise in September and economists’ forecast of 32%.

The country’s crude oil imports also climbed to their highest level since March as buyers adjusted to supply disruptions in the Middle East. Rare-earth exports edged higher compared with the previous month, with the pace of contraction in export volumes easing.

Despite the strong trade figures, China’s domestic economy continues to face significant challenges. Weak consumer spending and declining vehicle sales have encouraged manufacturers to look towards international markets.

Chinese car exports maintained solid growth in October. However, domestic vehicle sales declined for the 12th consecutive month, highlighting continued pressure on the country’s automotive industry.

Economists have cautioned that export growth could moderate next year, particularly if global demand weakens or the current AI investment cycle loses momentum.

China’s expanding trade surplus is expected to remain a key issue in international economic relations, especially as governments increasingly examine the impact of Chinese exports on their domestic industries.