1Q26_ Quarterly Outlook Report_Final_EN - Flipbook - Page 83
T H E P LUMB LI N E | A RETU RN TO F I RS T PRI N CI PL ES
Demand from other economies was more than enough to help China amass a trade surplus of
$111.7 billion in November, the third largest in the country’s history and above the median forecast
of $103.1 billion. Through the first eleven months of the year, China’s trade surplus for 2025 has
already eclipsed the $1 trillion mark, the highest on record and above 2024’s tally of $993 billion
that was just shy of that mark. The uneven trade relationship with the global economy has drawn
the ire of Western nations, most recently from French President Emmanuel Macron who said that
Europe may retaliate against Beijing, possibly through punitive tariffs modelled after U.S. trade
policy if the trade surplus was not addressed in the coming months. Such an action could dent
China’s economy which has come to increasingly rely on external trade to power growth amid
sluggish domestic demand.
China’s trade surplus eclipsed the $1 trillion mark for the first time ever
Trade balance (US$ billions)
1200
1076
900
600
300
0
1994
2000
2006
2012
2018
2024
Source: Customs General Administration PRC, Bloomberg Finance LP, Scotia Wealth Management | Jan 2025-Nov 2025
Alongside firms slashing prices in an increasingly competitive landscape, a sluggish domestic
economy has de-valued the Chinese yuan against other major currencies, making Chinese goods
even cheaper for overseas businesses. While some have called on Beijing to allow its currency to
appreciate against major peers, a stronger yuan would undoubtedly hurt Chinese exporters who
currently enjoy the tailwind of a stronger dollar/euro when profits are converted back into the
domestic currency.
82
