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By Nirmal P. Acharya

This year, the competition between China and the United States has reached another critical juncture. In the first 11 months, China’s trade surplus reached an unprecedented 1.08 trillion US dollars.

According to data from China’s General Administration of Customs, China’s trade surplus in goods reached a record high of 1.08 trillion US dollars in the first 11 months of 2025, breaking through the 1 trillion US dollar mark for the first time. This phenomenon is the result of the combined effects of short-term market behavior, global structural changes, and China’s industrial upgrading, reflecting the profound transformation of China’s foreign trade momentum and the global economic landscape.

I. Why the Surplus Hit a New High: Multiple Factors at Play

This historic surplus was not caused by a single factor, but was mainly influenced by the following points:

· Short-term market behavior: To avoid the uncertainty of global trade policies (such as the US “reciprocal tariffs”), there has been a “rush to export” phenomenon in the international supply chain, with future trade activities being brought forward.

· Significant achievements in diversifying export markets: Exports to traditional markets are under pressure: In the first 11 months, China’s exports to the US decreased by 18.9% year-on-year. Exports to emerging markets have grown rapidly: The growth in exports to ASEAN and the EU has fully offset the decline in exports to the US. Among them, exports to Africa have increased by as much as 26.3%.

· Declining prices of bulk commodities: In the first 11 months, the import volume of major bulk commodities such as crude oil, iron ore, and soybeans increased, but the average prices dropped by 9% to 23% year-on-year, reducing the total import value.

· Upgrading of export structure and competitiveness: Exports of “new three items” represented by electric vehicles, lithium batteries, and solar cells have grown strongly. At the same time, the proportion of intermediate goods (such as components and raw materials) in total exports has continued to rise, indicating that China is deeply embedded in the global industrial chain.

II. Structural Changes Behind the Surplus: New Driving Forces and New Roles

This trade surplus exceeding one trillion yuan is more crucial in that it reflects a fundamental reshaping of the underlying momentum of China’s foreign trade.

1. Role Transformation: From “World Factory” to “Global Supplier of Intermediate Manufacturing Products” China’s exports are shifting from previously supplying finished consumer goods to developed countries to providing intermediate products (components, raw materials, etc.) needed for production to emerging manufacturing bases around the world, such as those in ASEAN, India, and Latin America. This marks an extension of China’s position in the global industrial chain from the terminal link to more upstream and core links.

2. Energy Shift: Green Industries and High-tech Manufacturing as New Drivers · Green Capacity: China’s technological innovation and large-scale production capabilities in green sectors such as photovoltaics, lithium batteries, and electric vehicles have strongly supported the global energy transition, creating significant new demand. · High-tech Manufacturing: Exports of high-tech and mechanical and electrical products such as integrated circuits, automobiles, and industrial robots have continued to grow rapidly, becoming the core pillar driving exports.

3. Pattern Transformation: From Relying on a Single Market to a “Global South” Trade Network China’s trade ties with “Global South” economies, including those along the Belt and Road Initiative, ASEAN, and Africa, are becoming increasingly close, with South-South trade growing rapidly. This has significantly enhanced the resilience and risk resistance of China’s foreign trade, reducing its reliance on a few traditional markets.

III. The “Multifaceted” Impact of Surpluses

A huge trade surplus is a double-edged sword, meaning different things to different entities.

· Regarding the Chinese economy:

· Positive aspects: It demonstrates strong manufacturing competitiveness and supply chain resilience, has accumulated foreign exchange reserves, and enhanced economic stability.

· Challenges: Weak growth in imports (up by only 0.2% year-on-year in the first 11 months), indicating that domestic demand needs to be boosted. Additionally, a large trade surplus may intensify frictions with major trading partners and increase external uncertainties.

· For the global economy and trading partners:

· Providing stable supply and curbing inflation: China’s high-quality and reasonably priced exports have contributed to curbing inflation in the world, especially in developed countries.

· Driving common development: China’s exports of intermediate goods and equipment have directly supported the industrialization process of other developing countries. For instance, Chinese equipment has helped Thailand upgrade its fruit processing value chain.

· Triggering trade frictions: The huge trade surplus may be misinterpreted as “dumping” or “excess capacity”, leading some countries to adopt more stringent trade protection measures.

IV. Future Outlook: Pursuing Balance and High Quality

The future development path is not to infinitely expand the trade surplus, but to shift towards more balanced and high-quality growth.

· Policy orientation: From pursuing surpluses to trade balance: Recently, China has placed “insisting on domestic demand-driven development and building a strong domestic market” at the top of its agenda. This indicates that its policy focus is shifting towards expanding domestic demand and reducing reliance on external surpluses, in pursuit of more sustainable and secure development.

· Foreign trade trends: Slower growth, structural optimization: Experts predict that the growth rate of trade surpluses will gradually slowdown in the future. China’s foreign trade will shift from “high growth” to “high quality”, with greater emphasis on product value-added, market diversification, and trade model innovation.

In conclusion, a trade surplus of 1.08 trillion US dollars is a milestone figure. It not only represents the concentrated manifestation of the resilience of China’s manufacturing industry, the efficiency of its supply chain, and the achievements of industrial upgrading, but also reflects the profound changes in the global economic landscape.

The above analysis is actually not that crucial. What matters is that the result of the trade war initiated by the United States is that China’s exports have become increasingly strong. The United States has lost the trade war it initiated.

From now on, whether you like it or not, China is the dominant force in global trade. Nepal is a neighboring country of China, and the border between the two countries stretches for 1,300 kilometers. The nature of Nepal-China trade relations will determine the fate of Nepal. May those in charge of governance remember the figure of 1.08 trillion US dollars and understand the opportunities and challenges this figure will bring to Nepal.