Trade & Exports

China's export surplus is no longer just a customs story — it now shows up in the balance of payments, and that is the sharpest new fact this cycle. SAFE's August readout records $1.5 trillion in cross-border receipts and payments by non-bank entities, a net inflow of $62.4 billion (up 4% month-on-month), with goods trade the leading net-inflow channel ¹. The surplus the industrial machine generates is landing as foreign-exchange inflows, not idle capacity. Direction unchanged from the prior assessment; the plumbing now confirms it.

The composition of that inflow matters. Services ran a wider deficit, up 6% month-on-month, as summer study-abroad and travel picked up; foreign-invested firms' dividend and profit remittances fell 23% from a seasonal high; two-way direct investment was broadly flat ¹. Onshore FX market turnover stayed high at $3.9 trillion, and banks ran a $48.5 billion settlement surplus. The one soft spot: the corporate FX settlement ratio was 61.5%, 2.7 percentage points below the January-July average, meaning exporters are holding more of their earnings in foreign currency rather than converting. That is a preference signal, not a stress signal, but it is worth tracking.

The overcapacity signature underneath the surplus is unchanged and full-country in scale. August industrial value added rose 5.2% year-on-year (5.3% for January-August), with equipment manufacturing up 12.1% and high-tech manufacturing up 16.7%; computer, communications and electronics grew 17.2%, rail/ship/aerospace 13.4% ^2,3. Lithium-ion battery output jumped 57.2%, industrial robots 34.6%, 3D printing equipment 29.9%, and new energy vehicles hit 1.647 million units, up 21.9%, even as autos overall fell 2.7%; steel dropped 5.5% and cement 11.7% ². Strategic sectors run hot while legacy heavy industry contracts — and that output must find foreign buyers.

Washington's remedy machinery kept widening, but on cadence rather than as a shock. On 15 September Commerce issued a preliminary affirmative countervailing-duty determination on tin mill products from China, paired with a preliminary affirmative critical-circumstances finding and alignment of the final CVD with the final antidumping determination — critical circumstances being the lever that opens retroactive duties ⁴. The same day saw final results and partial rescission of the 2023-2024 antidumping administrative review on steel racks ⁵. Alongside, Commerce initiated countervailing-duty investigations into linear hydraulic cylinders from China, India and Mexico ⁶, and the ITC instituted antidumping and countervailing-duty investigations into corrugated pizza boxes from China, Malaysia and Turkey ⁷. The multi-country naming is the pattern: origin-shifting to third countries does not escape the docket.

The annual policy layer is now in motion too. USTR opened its request for comments on significant foreign trade barriers for the 2027 National Trade Estimate Report ⁸ — the pipeline that historically feeds new Section 301 actions. That is the slower-moving instrument, and it is the one that converts partner complaints into formal trade-barrier findings.

Liaoning remains the cleanest measured proof that diversification produces numbers. January-August trade hit a same-period record of 527.4 billion yuan, up 5.1%, with exports up 13.4% to 303.58 billion ⁹. ASEAN stayed the top partner at 97.2 billion yuan, up 19.1%; the EU was second at 84.49 billion, up 8.5%; Latin America rose 14.5%, Africa 83.8% and the five Central Asian states 91%. Processing trade climbed 36.5% to 131.09 billion yuan, lifting its share 5.7 points to 24.9% — the integration Beijing wants and the exposure Washington can reach are the same channel.

Beijing's own remedies and domestic-demand mirrors are unchanged. MOFCOM's Announcement No. 37 found Japanese dichlorosilane — a chip-film deposition precursor — dumped with material injury, imposing provisional cash-deposit measures from 8 September ¹⁰, while the pecan case against Mexico and the US was extended to 25 March 2027 on grounds of complexity ¹¹. On the demand side, the 26th China International Fair for Investment and Trade opened in Xiamen on 8 September with Guangdong as guest province ¹², CIFTIS closed in Beijing on 13 September, and Liaoning ran a consumption-promotion month from 15 September mobilizing 25,000 merchants across nine scenarios ^13,14. Net: momentum is strong, shifting south and west, and now visible in the FX ledger — but the fastest-growing relay markets are exactly where the newest US instruments, retroactive findings included, are aimed.