China's merchandise trade surplus has shown an overall trend of continuous expansion over the past two decades, primarily driven by robust export performance. Following its accession to the WTO in 2001, China became deeply integrated into the global division of labor, gradually establishing itself as the "world's factory." For an extended period, the country's export scale maintained rapid growth, serving as the core driver behind the widening merchandise trade surplus. Data from the General Administration of Customs reveals that from 2001 to 2025, China's merchandise trade surplus grew at a compound annual growth rate of 18%. In 2025, the surplus reached a historic high of $1.1889 trillion, surpassing the trillion-dollar mark for the first time and representing a 19.8% increase compared to 2024. Net exports of goods and services contributed 1.64 percentage points to GDP growth, the second-highest level since 2007, only surpassed by the surge in overseas demand amid global supply chain constraints in 2021.
A trade surplus reflects the difference between export and import volumes, and its fluctuation typically depends on the dynamics of both sides. The rapid expansion of China's merchandise trade surplus is mainly attributable to the resilient growth of exports coupled with a temporary slowdown in import growth. On one hand, China's exports have demonstrated remarkable resilience. In 2025, China's exports grew by 5.5%, and its share of global exports is expected to exceed 15%, reaching a new record high. This export resilience is underpinned by two key factors: first, the diversification of export markets. While exports to the United States declined significantly in 2025, exports to non-U.S. markets such as ASEAN and Africa grew rapidly, effectively offsetting the gap left by reduced exports to the U.S. Second, the ongoing upgrade of the export structure. China's exports are gradually shifting from being dominated by low-to-mid-range consumer goods like apparel and footwear in the past to being centered on intermediate and capital goods such as components and machinery equipment.
On the other hand, China's import growth has experienced a temporary slowdown. Influenced by factors including the decline in international commodity prices, the enhanced localization capabilities of China's industrial chains, and U.S. restrictions on high-tech exports to China, the country's import volume remained largely flat year-on-year in 2025. Firstly, the retreat in international commodity prices directly suppressed the value of China's imports. In 2025, international prices for major commodities like crude oil and iron ore fell significantly from their previous highs. With relatively limited changes in the physical volume of imports, price factors exerted a notable downward pull on the import value measured in monetary terms. Secondly, the continuous improvement in the localization capabilities of China's industrial chains has structurally substituted imports of certain intermediate goods and equipment. Thirdly, intensified export controls and scrutiny on high-tech products like semiconductor chips and lithography machines by some developed economies have affected the import pace of these related products into China.
China maintains a merchandise trade surplus with nearly 80% of its trading partners. According to data from the General Administration of Customs, China engaged in trade with 249 countries and regions in 2025, recording a trade surplus with 196 of them and a trade deficit with 53. Ranking the major economies by the size of China's merchandise trade surplus and deficit in 2025, the top ten source economies for China's trade surplus are: Hong Kong (China), the European Union, the United States, ASEAN, India, Mexico, the United Kingdom, the United Arab Emirates, Turkey, and Nigeria. Conversely, the top ten source economies for China's trade deficit are: Taiwan (China), Australia, Brazil, South Korea, Switzerland, Oman, Russia, Peru, Iraq, and Chile.
China's merchandise trade surplus primarily originates from two types of economies: The first category comprises developed economies with strong terminal consumption capacity, such as the United States and the European Union. These economies have high household consumption power but face hollowed-out domestic manufacturing, leading to sustained and sizable import demand for Chinese goods. The second category consists of developing economies in the early or middle stages of industrialization, such as ASEAN and India. These economies import large quantities of capital goods and intermediate goods from China for local industrial chain construction and production.
China's merchandise trade deficit also mainly stems from two types of economies: The first category is resource-based economies, including Australia, Brazil, Russia, Peru, Oman, and Iraq. China has a long-term and rigid net import demand for their energy and mineral resources. The second category is technology-intensive economies, such as Japan, South Korea, and Taiwan (China). China still relies on imports of intermediate goods from these regions for certain high-end manufacturing and critical production segments.
China's merchandise trade surplus sources have become more balanced, with the surplus narrowing against the U.S. but expanding against the EU and emerging economies. Influenced by factors such as trade friction, changes in industrial competitiveness, and differences in economic development stages, China's merchandise trade surplus performance with major economies has shown significant divergence: the surplus with the United States and Mexico has narrowed, while the surplus with the EU, ASEAN, India, Africa, and other economies has continued to expand. Overall, China's merchandise trade surplus sources are now more diversified, no longer overly reliant on the United States, but rather relatively balanced among the three major markets of the U.S., EU, and ASEAN, thereby enhancing overall stability.
China's merchandise trade surplus with the United States narrowed due to the impact of the tariff war, yet the U.S. remains one of the primary sources of China's surplus. Against the backdrop of escalating U.S. tariffs and trade restrictions on China, Chinese exports to the U.S. fell by 20% in 2025, and the merchandise trade surplus with the U.S. decreased by 22.3% compared to 2024. However, due to the complementary nature of the Sino-U.S. trade structure, China has maintained a long-term surplus with the United States in merchandise trade. From a trade structure perspective, U.S. imports from China are primarily concentrated in consumer goods and electromechanical finished products, while its exports to China focus more on agricultural products and capital goods such as aircraft and high-end equipment. From 2001 to 2022, China's merchandise trade surplus with the United States continued to expand, rapidly increasing from $28.1 billion to $404.1 billion, a growth of over 14 times. Since 2023, influenced by the continuation of tariff policies and adjustments in industrial chain layouts, China's surplus with the U.S. has temporarily narrowed. Nevertheless, judging by absolute size and structural importance, the United States remains a significant source market for China's merchandise trade surplus. In 2025, China's surplus with the U.S. still amounted to $280.4 billion, accounting for 23.6% of China's total merchandise trade surplus.
Affected by the spillover effects of U.S. tariff policies, China's merchandise trade surplus with Mexico also narrowed. In 2025, the U.S. imposed a 25% "fentanyl tariff" on Mexico, with only Mexican products complying with the rules of origin under the USMCA eligible for zero or low tariffs when exported to the U.S. Under these constraints, the export channels for relevant Chinese products previously transshipped via Mexico to circumvent U.S. "Section 301 tariffs" were significantly compressed, weakening the transshipment trade effect. China's exports to Mexico fell by 1.2% in 2025, the first negative growth since 2021, with exports of final consumer goods dropping by 4.7%.
In contrast, China's merchandise trade surplus with the EU, ASEAN, India, and Africa expanded significantly. In 2025, the surpluses with these economies reached $291.8 billion, $275.8 billion, $116.1 billion, and $102.0 billion respectively, expanding by 18.1%, 44.6%, 13.3%, and 64.6% compared to 2024. Regarding the EU, as China's overall manufacturing competitiveness continues to improve, some industries have shifted from past "import dependence" on the EU towards "local substitution and outward supply." The transformation in the automotive industry is particularly typical. In 2025, China's auto imports from the EU fell by 34.2%, while its auto exports to the EU grew by 18.1%. In 2024, China's auto trade balance with the EU underwent a substantive change, turning from a long-term deficit to a surplus for the first time, and the surplus size continued to expand in 2025. In this process, Germany, as one of China's primary sources of auto imports, also saw a significant shift in its trade pattern with China. China achieved a merchandise trade surplus with Germany in 2022 for the first time in 13 years, and this surplus has since expanded rapidly, growing from $4.8 billion in 2022 to $25.4 billion in 2025. This change indicates a substantive shift in comparative advantages in certain manufacturing sectors between China and Europe, highlighting the enhanced competitiveness and advantage of China's high-end manufacturing.
For economies in the early or middle stages of industrialization, such as ASEAN, India, and Africa, China's merchandise trade surplus with them has continued to expand in recent years, primarily driven by their industrialization demands. The industrial systems of these economies are still in the phase of supplementing and building chains, with insufficient supply capacity for capital goods and mid-to-high-end finished products, leading to sustained import demand for Chinese electromechanical products, basic equipment, and key components. Their exports to China, however, are mainly concentrated in resource products, primary commodities, or low value-added labor-intensive manufactured goods, resulting in a noticeably asymmetric bilateral trade structure that pushes China's trade surplus with them to continually widen.
The pattern of trade deficits shows structural differentiation: China's deficits with resource-based economies like Australia and Peru are affected by commodity price fluctuations, while deficits with technology-intensive economies like Japan and South Korea have widened. Influenced by the decline in prices of commodities such as iron ore and crude oil, China's merchandise trade deficit with resource-based economies like Australia, Oman, and Iraq experienced a temporary narrowing in 2025. The deficit amounts with Australia, Oman, and Iraq were $53.9 billion, $21.7 billion, and $16.8 billion respectively in 2025, all narrowing compared to the previous year. The main import from Australia is iron ore, while the primary imports from Oman and Iraq are crude oil. The narrowing of the deficit with these countries was mainly due to the fall in iron ore and crude oil prices. Breaking down the factors into price and volume components, in 2025, China's import volumes of crude oil and iron ore grew by 4.4% and 1.8% respectively, but the average import prices fell by 12.6% and 8.6% respectively, leading to a decrease in the import value of crude oil and iron ore by 8.8% and 7.1% respectively. Price factors were the main reason for the narrowing of China's merchandise trade deficit with some resource-based economies.
Conversely, driven by rising prices for copper and precious metals, China's merchandise trade deficit with economies like Peru expanded significantly. In 2025, China's imports of copper ores and concentrates, as well as precious metal ores and concentrates from Peru, increased by 19.7% and 57.8% respectively, directly driving an 18.3% growth in China's overall imports from Peru. Regarding Russia, the expansion of China's trade deficit with it mainly stemmed from the weakening Russian domestic economy, which in turn led to a decline in Chinese exports to Russia. In 2025, China's exports to Russia fell by 10.4%.
As China's industrial competitiveness continues to improve, its merchandise trade deficit with Japan and South Korea has generally shown a narrowing trend. The average annual deficit with South Korea and Japan from 2017 to 2021 was $71.6 billion and $32.4 billion respectively; from 2022 to 2025, these narrowed to $32.0 billion and $6.6 billion respectively. China's accelerated push for import substitution in some mid-to-high-end manufacturing sectors has led to a continuous decline in reliance on key components and specialized equipment imports from Japan and South Korea. However, in 2025, China's trade deficit with Japan and South Korea widened. The deficits with Japan, South Korea, and Taiwan (China) in 2025 were $7.5 billion, $42.8 billion, and $147.1 billion respectively, expanding by 76.8%, 21.1%, and 3.2%. This was due to two factors: firstly, a significant increase in demand for semiconductor chips from China's AI and new energy vehicle industries; secondly, a global AI computing investment boom that triggered chip shortages and price increases. China's integrated circuit imports grew by 10.1% in 2025, with imports from Japan, South Korea, and Taiwan (China) increasing by 65.7%, 23.2%, and 19.6% respectively. Their import values accounted for 6.8%, 22%, and 35.9% of China's total integrated circuit imports respectively.
Analyzed by product category, the deficit in primary products narrowed, while the surplus shifted from being dominated by low value-added manufactured goods to being led by high-end manufacturing. According to the Standard International Trade Classification (SITC), export goods are typically divided into two main categories: primary products and manufactured goods. Primary products mainly include resource-based goods and agricultural products such as food, beverages, raw materials, and mineral fuels. Manufactured goods encompass chemical products, articles of metal, rubber, cork, etc., machinery and transport equipment, and miscellaneous manufactured articles like furniture and clothing. China has long maintained a pattern of "deficit in primary products, surplus in manufactured goods" in commodity trade. In 2025, China's deficit in primary products reached $859.3 billion, while its surplus in manufactured goods reached $2,048.3 billion.
The decline in prices of commodities like crude oil contributed to the narrowing of the primary products deficit. Raw materials such as oil seeds, wood, and metal ores, along with mineral fuels like crude oil and coal, have long been the main sources of China's primary products deficit. As China's industrialization advances and its demand for resources and energy continues to rise, the deficits in raw materials and mineral fuels have kept expanding, accounting for 48.2% and 45.7% of the primary products trade deficit in 2025 respectively, totaling over 90%. This reflects China's continued high external dependence on resources and energy. However, affected by the price decline of commodities like crude oil, the mineral fuels deficit narrowed by 12.6% in 2025 compared to 2024, leading to an overall 4.5% narrowing of the primary products deficit.
Significant changes have occurred within the structure of manufactured goods, with the source of the surplus gradually shifting from low value-added miscellaneous articles like furniture and footwear to high value-added products like machinery and transport equipment. Along with the continuous upgrade of China's industrial structure and the restructuring of global supply chains, the source structure of the trade surplus in manufactured goods has undergone notable changes. From 2022 to 2025, the surplus in machinery and transport equipment expanded from $762.6 billion to $1,016.3 billion. In contrast, the surplus in miscellaneous articles narrowed against the backdrop of weakening external demand and intensified competition, falling from $621.3 billion to $532.8 billion. In 2025, the surpluses in machinery and transport equipment and miscellaneous articles accounted for 49.6% and 26.0% of the total surplus in manufactured goods, respectively. As the focus of the surplus shifted from low value-added goods to high-end manufacturing, the surplus in manufactured goods expanded by 8.3% in 2025 compared to 2024. Compared to miscellaneous articles, exports of machinery and transport equipment are less sensitive to price fluctuations and short-term consumption cycles, relying more on industrial capability and technological accumulation. This also enables China's surplus in manufactured goods to demonstrate greater resilience amid increasing volatility in the external environment.
However, it is worth noting that while the expansion of the high value-added product surplus enhances overall trade resilience, its potential risks are also rising. High value-added machinery products, with their high technology and capital intensity, are more likely to become key targets for trade protection and industrial policy interventions by external economies. Furthermore, once other economies import machinery and equipment to complete their industrial chain layouts, it can lead to substantive industrial chain relocation.