China has logged a US$1 trillion trade surplus. Where is all that money going?
Trade surplus growth has not been matched in foreign exchange reserves – a gap analysts said can be explained by private sector outflows
Analysts said the gap reflects how much of the surplus has flowed back overseas through asset investment, largely made by private-sector players, leaving China’s external accounts more balanced than the headline trade figures suggest.
Han Shen Lin, capstone director for the quantitative finance master's programme at New York University Shanghai, said the trade surplus “doesn’t automatically mean a rise in official reserves any more,” as a significant portion is being recycled through the private sector.
“What we’re seeing is a shift from state-led reserve accumulation to market-led capital outflows,” Lin said, noting Chinese firms are paying down foreign debt, building overseas assets or keeping earnings offshore.
“The money hasn’t disappeared; it’s just no longer sitting on the People’s Bank of China’s balance sheet.”
As the world’s manufacturing powerhouse, China has long run a sizeable surplus in the goods trade – a trend that has intensified, with the country surpassing last year's record US$992.6 billion in the first 11 months of 2025, logging a US$1.076 trillion surplus for the period.
This is nearly double the full-year trade surplus of US$593.9 billion recorded a decade earlier in 2015, according to financial data provider Wind.
In contrast, China’s foreign exchange reserves stood at US$3.346 trillion at the end of November, according to official data – only slightly up from the US$3.202 trillion recorded at the end of last year.