China’s Trade Surplus Grows Sharply as Imports Fall

China’s trade surplus expanded more than expected in the first two months of 2025, as imports dropped sharply due to weaker domestic demand and ongoing trade tensions with the U.S.

Trade Surplus Surpasses Expectations

Official data released on Friday showed that China’s trade balance reached $172.50 billion in the January-February period, far exceeding market expectations of $143.10 billion. This growth was primarily due to a steep decline in imports, which fell 8.4% instead of the anticipated 1% rise.

U.S. Tariffs and Trade War Impact Exports

China’s exports increased 2.3% year-on-year, but this was below the expected 5% growth and a sharp slowdown from 10.7% growth in December. The drop in export momentum comes amid escalating trade tensions with the U.S.

China’s overseas sales increased by 2.3% in the first two months of the year, reaching $540 billion, according to the General Administration of Customs. However, imports dropped by 8.4%, resulting in a trade surplus of $170.5 billion.

China faces a high risk of a global trade war. Although only about 15% of its exports go directly to the US, many Chinese goods still reach the US through countries like Vietnam and Mexico.

U.S. President Donald Trump imposed a 10% tariff on Chinese goods starting February 4, later increasing the levy to 20%, which has affected Chinese exports. In response, China imposed 10%-15% retaliatory tariffs on U.S. agricultural imports.

The latest trade data shows how China has been affected since Donald Trump began increasing tariffs on its products. The US first imposed a 10% tax on almost all Chinese imports on February 4, then raised it to 20% earlier this week.

Imports See Steep Decline

Despite weaker export growth, the sharp drop in imports had a greater impact on the trade balance. Falling imports indicate weaker domestic demand in China, which has been under pressure due to economic uncertainties and trade restrictions.

China’s Economic Outlook

Beijing is expected to support economic growth through new stimulus measures, which were discussed at its ongoing annual parliamentary meeting. These policies aim to boost local demand and stabilize the economy despite the trade war with the U.S.

China’s trade situation remains uncertain, with global markets watching how both the U.S.-China trade war and domestic economic policies shape future growth.

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