Another Big Month for Chinese Exports
China on Tuesday reported another phenomenal month of exports. Its total shipments rose 25% year-on-year in August to $401.4 billion. Meanwhile, total imports increased 28.2% to $282.4 billion. The gap means China is on track to report a second straight year of a trade surplus of well over a trillion dollars.
Already for the year, it’s over $800 billion.
The strategy that Beijing is continuing of goosing exports to stimulate its economy has caused friction in Brussels and Washington. Nineteen of the Group of 20 biggest economies have called on China to address its surplus. China has been pursuing other avenues of growth. On Sunday, it announced it would inject over $50 billion into state banks and insurance companies.
There are signs in the trade data that China’s domestic economy is losing some pace. Imports of copper ore and concentrates fell 9.5% year-on-year in August to 2.5 million tons. Purchases of coal fell 1.5% to 42.1 million tons and imports of crude petroleum oil declined 22.9% to 37.9 million tons.
China’s Hidden Trade Deficit
China 2.0’s strength is the country’s mastery of the high-tech economy. It’s shipping out record numbers of cars, trucks, ships, electronics, and machinery. In August, for example, it increased the number of auto exports 37.3% to 1.05 million, worth $18.3 billion.
“Strong AI-related semiconductor demand remained supportive, as reflected in surging Korean shipments to China, while higher oil prices likely boosted headline import growth,” Citibank wrote before the August data came out.
However, even as it now exports over 1 million cars a month, China has become increasingly dependent on several raw materials and components needed to make those goods.
One of those is integrated circuits, a.k.a. microchips. The number of integrated circuits shipped fell 7.8% to 30,745 million pieces while the dollar value leapt 130.6% to $40.7 billion. Meanwhile, imports of integrated circuits increased 6.8% to 54,288 million pieces while the value increased 83.7% to $65.8 billion.
Inflation Still Rising
In other words, prices are rising, while China is having to export fewer and import more chips. There are other examples in recent trade statistics of inflation rising. The number of mobile phones exported declined 13% to 52,596,324. The value increased 29.8% to $8.8 billion.
Dependent on South Korea and Taiwan
According to TDM data, China in 2026 has bought over 60% of its integrated circuits from Taiwan and South Korea.
Imports from South Korea increased 108.1% to $32.2 billion. In second place is Taiwan. Imports increased 41.5% to $26.9 billion. In third place is Japan. Imports rose 20% to $16.9 billion.
Following these three nations in the import league table, China’s top sources of imports are four commodity powers: Australia, U.S., Russia, and Brazil. After that, rounding out the top 10 are Vietnam (a diversity of goods), Switzerland (gold) and Indonesia (petroleum and other commodities).
Asian Neighbors
Exports to ASEAN countries increased 30.4% to $74.4 billion. Those sales are expected to keep increasing as the 83-mile Pinglu Canal opens. It will allow shippers to transport goods from Guangxi Zhuang in the south of China to Vietnam and other Asian economies via the Gulf of Tonkin, also known as the Beibu Gulf.
Exports to the U.S. Soar
Exports to the U.S. rose 34.4% to $42.5 billion. That’s coming off a low base because of tariffs imposed in the early days of the Trump administration. The trade truce agreed to by Washington and Beijing has helped recover.
By comparison, exports to European Union ticked up 6.7% to $55.1 billon.
According to TDM, the biggest increases in July’s exports to the U.S. were machinery and electronics, including semiconductors and other high-tech goods. Shipments of apparel, plastics and car and trucks also rose.