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China’s export figures have surged to record levels as the country navigates the ongoing trade war with the US. In the first two months of the year, exports rose 2.3%, reaching a total of $540 billion. This growth is largely attributed to the strategy of frontloading shipments, driven by the threat of escalating US tariffs.
Frontloading and its Impact on China’s Trade
The surge in Chinese exports comes as businesses attempt to beat the imposition of higher tariffs. As tariffs continue to rise under former President Trump’s administration, China’s trade landscape has shifted significantly. The US raised tariffs from 10% to 20% on Chinese imports, beginning on February 4, with further increases expected. The result? A sharp uptick in export activity as companies rush to get their goods to market before the higher costs kick in.
Trade Surplus: Exports Rise, Imports Fall
While exports surged, China’s imports fell by 8.4%, resulting in a trade surplus of $170.5 billion. This was much higher than the median forecast of economists, who expected exports to rise by 5.9% and imports to grow by 1%. The figures indicate that, despite tariff challenges, China is still able to maintain a strong trade surplus.
The Risk of Escalating Tariffs on China’s Growth
China’s reliance on exports for economic growth has made it highly vulnerable to the ongoing trade war. Although the US directly absorbs only about 15% of Chinese exports, many goods are routed through other countries such as Vietnam and Mexico before reaching the US. This global supply chain, however, may be disrupted further as tariffs continue to climb.
Should the US persist in raising tariffs, it could severely undermine one of the key drivers of China’s growth, which contributed to nearly a third of the country’s economic expansion in 2024. Even at the current tariff levels, China’s export growth could slow significantly for the rest of the year, putting further strain on the economy.
