Give Up, Mr. Trump! China Truly Cannot Be Defeated
Pressure from tariffs by US President Donald Trump was once expected to hinder China’s export performance. However, the reality has been the complete opposite.
The latest data shows that China’s exports continued to grow solidly by 14.7% in the first quarter of 2026, while the trade surplus hit a record $1.2 trillion in 2025, with total exports reaching $3.8 trillion.
This was driven by market diversification, increased product complexity, and a surge in global demand for technology components. This resilience confirms that China’s export engine is not only able to withstand trade wars but also transform into something stronger and more adaptive.
Structural Shift
China’s export strength today no longer relies on cheap volume but on increased production complexity. Dependence on the US market continues to decline, while penetration in high value-added sectors has increased significantly.
In the automotive industry, China’s global export share jumped from 4.5% to 11.4% over the 2014-2024 period. In the electronics sector, the increase was from 20.7% to 26.1%.
Based on Harvard University data, the export complexity index also rose from 0.29 to 0.36. This reflects China’s ability to produce increasingly sophisticated goods. In contrast, the United States has experienced a decline in the same indicator.
Supply Chain Adaptation
The decline in China’s exports to the United States does not mean a loss of market but a change in direction. In 2025, China’s exports to the US fell by more than $100 billion, but exports to other countries surged by around $300 billion.
However, many countries increasing imports from China also recorded a surge in exports to the US market, indicating their role in an increasingly integrated global supply chain.
Vietnam is the most prominent example, where imports from China rose by around $36 billion, while its exports to the United States increased to $57 billion. This pattern underscores that much of global trade flow is now no longer direct but through more complex intermediary routes.
Citing The Economist, this estimate uses product code equations, comparing goods imported from China with those exported to the United States.
AI Drives Technology Exports
The wave of artificial intelligence or AI has become a new catalyst for China’s exports. In the first quarter of 2026, memory chip exports reached $46 billion, a 174% year-on-year surge, and for the first time became the largest export commodity.
This surge was driven by massive global data centre construction and rising needs for digital infrastructure. Demand for semiconductors, batteries, and electronic components.
Price Advantage
In addition to volume and technology, China’s advantage also lies in pricing. For 41 consecutive months, the country has experienced factory price deflation, which effectively lowers production costs and increases export competitiveness.
At the same time, the real value of the yuan has weakened by around 15% since early 2022 according to the IMF. This combination makes Chinese products even more competitive in the global market.
The domestic energy structure further strengthens this position. Reliance on local coal protects Chinese producers from global energy price spikes, unlike many competitors in Asia.
External Pressures
Although still strong, China’s exports are beginning to face new pressures from external factors. The conflict in Iran has pressured exports to the Gulf region, dropping 52% year-on-year in March 2026.
Meanwhile, the European Union is increasing protectionist policies, including tariffs on Chinese electric vehicles. With a trade surplus against the EU reaching $291 billion in 2025, up 120% since 2020, regulatory pressures are expected to continue rising.
Behind China’s export strength, its global competitiveness actually stems from weak domestic demand. Stagnant domestic consumption suppresses imports and pushes producers to seek external markets, thereby enlarging the trade surplus. In 2025, net exports contributed 1.6 percentage points to total economic growth of 5%.
With a growth target of 4.5-5% for 2026, the government is not under significant pressure to push domestic stimulus, as long as the external sector continues to support the economy.