Trade & Exports

China's trade surplus is running near record levels and the two-track strategy—deepening non-US trade links while treating the US truce as useful but not essential—is now explicit in fresh data and policy signals. July's balance-of-payments goods surplus reached $110.3bn, with goods-and-services surplus at $91.2bn (619.8bn yuan) ¹. This confirms exports remain the primary engine of external demand even as Washington's trade remedies grind on. The service trade deficit of 129.9bn yuan ($19.1bn) shows goods are doing the heavy lifting, making the manufacturing export engine central to the external surplus.

On the non-US track, MOFCOM on Aug 27 confirmed China remains Kyrgyzstan's largest trading partner, with bilateral trade at $11.7bn for January–July 2026 and rapid growth in exports of electric vehicles, lithium batteries, photovoltaic products and mechanical-electrical goods ². The sales pitch is being pushed at multiple levels: Xi Jinping departs Aug 30 for the SCO summit in Bishkek and state visits to Kyrgyzstan and Egypt ³; Gansu's provincial leadership held a special study session on 'deep integration' into Belt and Road and building an 'open province' ⁴; and Hainan's party secretary inspected Haikou Customs to accelerate zero-tariff and processing-value-added policies after island-wide customs closure ⁵.

Provincial and subnational matchmaking events reinforce the pattern. Shandong hosted its 2026 dialogue with Vietnam's Bac Ninh province focusing on electronics, semiconductors, logistics and agricultural processing ⁶; Hainan ran a high-tech matchmaking event in Shanghai targeting biomedicine and digital economy ⁷; and a Hainan-Thailand Chinese business dialogue in Haikou promoted tropical agricultural trade, healthcare and cultural ties ⁸. These are not symbolic: they are designed to shift supply chains and investment flows toward ASEAN and 'Global South' markets, reducing dependence on the US market.

On the US track, the détente is real but shallow. SCMP reports Chinese executives may join Xi's US trip and that the one-year Busan truce extension is 'almost certain'; Wang Yi urged US ambassador David Perdue to implement leaders' consensus and manage differences ⁹. Yet the US trade remedy machinery continues to move against Chinese products: final no-shipment determinations for hardwood plywood (AD/CVD administrative reviews) ¹⁰, a court-related amendment to carbon steel butt-weld pipe fittings covered-merchandise scope ¹¹, and postponement of preliminary less-than-fair-value determinations for PTMEG ¹² all landed in the Federal Register Aug 28.

The counter-signal is that Washington's trade threats are not limited to remedies: the prior standing brief noted Trump's invocation of Section 338 and threats of 50% tariffs on Canadian autos, signaling that US tariff policy remains erratic ¹³. Beijing is therefore unlikely to treat any truce extension as a durable settlement; it is buying time while expanding the alternative network. The same machine that produces export surpluses also produces 'new three' goods that trigger overcapacity complaints abroad, and MOFCOM's Kyrgyzstan data highlights how quickly those goods are being redirected to non-US markets.

The implications are clear: expect continued high export volumes, growing trade surplus, and further pushback from trading partners on overcapacity and anti-dumping grounds. The policy machinery is explicitly geared toward 'opening up' through BRI and free trade ports, but the sustainability of export-led growth will depend on whether new markets can absorb redirected volumes and whether Washington's promises translate into binding commitments. The near-term risk is not a collapse in exports but a slow accretion of tariff and anti-dumping barriers across multiple markets.