China Expects Trade Growth to Hold Up as External Sector Remains a Key Economic Buffer

China’s goods trade reached approximately 34.78 trillion yuan during the first eight months of 2026, an increase of 17.6% from a year earlier. Exports rose 14.6% to 20.17 trillion yuan, while imports climbed at an even faster 22% pace to 14.61 trillion yuan. August maintained that momentum: total goods trade increased 19.8% year on year to about 4.65 trillion yuan, with exports rising 18.6% and imports advancing 21.7%. Imports have now grown faster than exports for several consecutive months, an important development for Beijing as it pushes back against international criticism that China’s trade expansion is driven overwhelmingly by exports and excess industrial capacity.

The composition of trade also shows that China is becoming more dependent on advanced manufacturing and a more geographically diversified group of trading partners. Exports of mechanical and electrical products rose 21.9% in the first eight months, while vehicle exports increased 47.1%, ship exports climbed 29.8% and industrial-robot exports rose 13%. Trade with Belt and Road partner economies increased 15.9%, while trade with ASEAN, Latin America and Africa expanded by 20.6%, 14.5% and 18.5%, respectively. China recorded simultaneous export and import growth with more than 100 countries and regions during the period. Even trade with the United States showed some stabilization, with January–August bilateral goods trade rising 1.3% after several consecutive months of growth, despite continuing strategic and tariff tensions.

China’s balance-of-payments figures reinforce the strength of the external trade position. SAFE reported a current-account surplus of $378 billion in the first half of 2026. Within that figure, the goods-trade surplus reached roughly $526.3 billion, partly offset by a services-trade deficit of around $115 billion and a deficit in primary income. In the second quarter alone, the goods surplus reached $278.8 billion. More recent August data showed combined goods and services exports of $424.3 billion against imports of $329.9 billion, producing a monthly surplus of $94.4 billion. Services are also becoming a larger component of external activity: earlier SAFE figures showed services trade expanding around 10% year on year in the first five months, while services exports rose about 21%, supported by travel, digital services and other cross-border business activity.

Capital flows present a more complex picture. SAFE said cross-border receipts and payments by China’s non-bank sector reached a record $9.2 trillion in the first half, 21% higher than a year earlier, while the renminbi accounted for 52.9% of cross-border settlement. Foreign investment flows also showed signs of recovery earlier in the year, with net foreign investment of various types totaling roughly $160 billion in the first five months and foreign equity investment exceeding $50 billion. Capital entering high-tech manufacturing and high-tech services increased 61% in the first half and represented 36% of foreign capital inflows. At the same time, China recorded a $345.2 billion deficit in its capital and financial account during the first half, underscoring that strong trade surpluses coexist with substantial outbound investment, portfolio adjustment and other financial flows.

The outlook therefore remains positive but increasingly dependent on China’s ability to manage a difficult external environment. Trade restrictions, geopolitical conflicts, export controls and protectionist measures continue to create uncertainty for Chinese companies, particularly in advanced manufacturing. Beijing has responded by expanding trade relationships across emerging markets, encouraging higher-value exports and pledging further measures to make cross-border trade and investment easier. Recent China-U.S. negotiations have also produced a limited agreement to work toward reciprocal tariff reductions covering $30 billion of trade from each side, although much larger structural disputes remain unresolved. With domestic property investment and household demand still weak, exports and external services have become an important stabilizer for the Chinese economy. The durability of that support will depend on whether China can continue broadening its markets and upgrading its export mix without provoking a stronger wave of trade barriers from its major partners.