China’s export sector delivered a powerful start to the year, driving the country’s trade surplus to its highest ever level for the combined January and February reporting period.
Official customs data revealed that exports increased by 21.8% compared with the same period a year earlier, far exceeding economists’ forecasts that had predicted growth of only 7.1%.
The unexpectedly strong performance underlined the resilience of the world’s second-largest economy at a time when trade tensions with the United States continue to cast uncertainty over global supply chains.
Imports also posted robust growth, rising 19.8% year on year during the two-month period and significantly beating expectations of a 6.3% increase compiled from a Reuters survey of economists.
Together these movements pushed China’s overall trade surplus to $213.62 billion, comfortably surpassing market expectations that had anticipated a figure closer to $179.6 billion.
Shifting Global Trade Relationships
Despite the headline strength in total trade, the figures revealed shifting dynamics in China’s major trading relationships as geopolitical tensions continue influencing International commerce and supply chain strategies.
Trade between China and the United States fell sharply during the period, declining 16.9% year on year to 609.71 billion yuan, equivalent to approximately $88.22 billion.
In contrast, commercial activity with Europe and Southeast Asia expanded rapidly, highlighting how Beijing has increasingly diversified its export destinations amid continued friction with Washington.
China’s trade with the European Union climbed 19.9% to reach 998.94 billion yuan during the first two months of the year, according to the government’s official trade statistics.
Commerce with members of the Association of Southeast Asian Nations also strengthened considerably, rising 20.3% and reaching a combined value of 1.24 trillion yuan over the same timeframe.
Lunar New Year Timing Adds Complexity
Economists noted that China typically reports January and February trade data together to smooth out distortions caused by the Lunar New Year holiday, which shifts between calendar months each year.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the timing of this year’s holiday likely contributed to the unusually strong annual growth figures reported in the latest release.
“The surprise was partly due to the relatively late Lunar New Year holiday, which may have boosted the year-on-year growth rate compared with last year,” Zhang said in a note following the data release.
However, he also cautioned that the holiday effect alone could not entirely explain the magnitude of the export growth reported during the first two months of the year.
He added that the robust trade figures, combined with Beijing’s relatively conservative economic growth targets announced during the country’s annual policy meetings, reduce the likelihood of near-term economic stimulus.
Inflation And Policy Signals From Beijing
The trade data arrived shortly after separate government figures showed that China’s consumer inflation rate experienced its strongest annual increase in more than three years during February.
Consumer prices rose 1.3% compared with the same month a year earlier, accelerating sharply from January’s modest 0.2% increase and exceeding economists’ expectations of a 0.8% rise.
The stronger inflation reading was partly attributed to elevated consumer spending during an extended holiday period, which temporarily boosted domestic demand across several sectors of the economy.
During the annual “Two Sessions” political gathering, Premier Li Qiang set China’s official economic growth target for the year within a range of 4.5% to 5%.
That target represents the lowest growth range announced by Beijing since the early 1990s, reflecting cautious expectations about the global economy and ongoing geopolitical uncertainties.
Ongoing Trade Frictions With Washington
China’s trade outlook continues to be shaped by a complex relationship with the United States following renewed tariff disputes triggered after Donald Trump returned to the White House in January 2025.
Although tariffs have fluctuated as negotiations progressed, the two countries remained locked in a prolonged trade confrontation throughout much of the past year.
Relations improved somewhat after Trump and Chinese President Xi Jinping held talks during the Asia-Pacific Economic Cooperation summit in Busan, South Korea, in October.
U.S. tariffs on Chinese goods currently stand at the global 10% level after the Supreme Court struck down Trump’s tariffs enacted under the International Emergency Economic Powers Act.
However, older tariffs imposed under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962 still apply to several products and can reach levels as high as 100%.
Business intelligence firm China Briefing said in February that “due to the multitude of existing duties, the effective tariff rate on many Chinese goods shipped to the US remains close to 30 percent – still the highest of any country.”