China’s exports reached a record $540 billion in the first two months of the year, defying heightened U.S. tariffs and the threat of further trade restrictions.
However, imports unexpectedly fell by 8.4 per cent, resulting in a record trade surplus of nearly $171 billion, according to data released by the General Administration of Customs on Friday.
The surge in exports, which represents a 2.3 per cent increase year-on-year, exceeded market expectations despite the economic uncertainty posed by rising tariffs.
In contrast, economists surveyed by Bloomberg had forecast a 5.9 per cent rise in exports and a 1 per cent gain in imports.
The unexpected decline in imports suggests that domestic demand remains sluggish, exacerbating concerns about the health of the world’s second-largest economy.
“The damage of higher U.S. tariffs on China’s exports will likely show up in next month’s data,” warned Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “While the tech sector in China is booming, domestic demand is still weak as the property sector downturn has not ended,” he added.
The U.S. government imposed a 10 per cent tariff on nearly all Chinese imports on February 4, escalating it to 20 per cent earlier this week.
The move has heightened concerns about a protracted trade war between the world’s two largest economies.
Despite the tariffs, exports to the United States rose to almost $76 billion, marking the highest level in three years for the first two months of the year.
However, this figure was still below the same period in 2022, when pandemic-driven trade surges inflated bilateral trade volumes.
China’s exports to the 10 countries in the ASEAN bloc also hit a record $87 billion, underscoring the country’s strategy of diversifying trade partners amid escalating tensions with Washington.
Exports to Vietnam reached an all-time high, while sales to the European Union were also higher than during the same period last year.
The unexpected drop in imports, which reached the lowest level since 2020, reflects the broader challenges facing China’s domestic economy.
The slowdown has been attributed to weak consumer demand and a prolonged downturn in the property sector, which has been a key driver of growth.
The Chinese government has responded by announcing plans to expand the budget deficit to support a growth target of 5 per cent for the year.
Analysts warn that the record trade surplus could face pressure in the coming months as the full impact of U.S. tariffs filters through.
“China’s weaker-than-expected imports are a bad sign,” said Eric Zhu, an economist at Bloomberg. “The impacts of the U.S. tariff hike in February and softening external demand appear to have outweighed front-loading by U.S. importers that we expected to buoy shipments, at least temporarily,” he explained.
