China’s exports unexpectedly declined in October as weak global demand could not counteract the sharp drop in shipments to the US. This is another setback for an economy that is already experiencing slower growth due to low consumer spending and investment.

According to official data released on Friday, exports fell 1.1% compared to the same month last year, marking the first decline in eight months. Exports to all countries except the US increased by 3.1%, but this was not enough to make up for the more than 25% drop in shipments to the US.

Economists from Barclays, including Yingke Zhou, warned that if export strength cannot be maintained, China’s growth may face a "triple whammy" from ongoing issues in the property sector, along with reduced private consumption and exports.

Up until now, Chinese exports have been strong, with other markets compensating for declines in US shipments. Sales abroad had been rising every month since February, following a slowdown due to the Lunar New Year holiday.

However, October broke the trend of growth as Chinese companies seek new markets. Various trade indicators showed a decline from record highs, with Shanghai port handling the fewest containers since April.

The drop in overall exports surprised almost all analysts, with a Bloomberg survey estimating a median increase of 2.9% for October; only one analyst had predicted a decline.

Trade tensions with the US escalated last month, but a deal was reached later in October during talks between Presidents Trump and Xi Jinping in South Korea.

Starting Monday, the US will reduce tariffs on Chinese goods by 10%. This could increase trade between the two largest economies by the end of the year, though the impact may be limited, as tariffs on Chinese goods remain higher than those on imports from countries like Vietnam.

If global demand continues to slow, it could further reduce exports and harm the broader economy in the last two months of the year. Last quarter, China's economic growth slowed to its weakest level in a year despite high export figures.

This weakness may continue, with analysts predicting the lowest growth rate this quarter since late 2022 when China was coming out of strict Covid lockdowns.

The slowdown seemed widespread in October, with shipments to the European Union growing only 1%, the slowest rate since a decline in February.

Exports to other major markets, including South Korea, Russia, and Canada, also experienced double-digit drops. China does not immediately release detailed trade data with all countries; some figures will be published later this month.

“In the coming months, China's exports to other emerging markets will be closely watched,” Homin Lee, a macro strategist at Lombard Odier in Singapore, stated. “They are important indicators for assessing the growth of Chinese tech and consumer brands in international markets.”

Despite the overall decline in exports in October, they still surpassed $3 trillion in the first ten months of the year, a record pace. Along with weak imports throughout the year, the trade surplus has reached new heights, amounting to $965 billion so far in 2025.

China’s imports grew by only 1% in October, resulting in a surplus of $90.1 billion.

The yuan’s recent gains against the dollar, reaching its highest value in nearly a year, made Chinese goods more expensive abroad, which dampened exports.

The decline in sales to markets in Latin America and Southeast Asia suggests that the yuan's strength and Mexico's import restrictions are starting to be significant factors, according to Lee.

Nonetheless, Chinese export prices have dropped in all but one month since mid-2023, due to domestic deflation, which offsets the effects of a stronger currency and lowers shipping costs.

As a result, Chinese companies may continue to expand their presence overseas, particularly following the trade war with the US. A rebound was noted at the end of last month, with container traffic at Chinese ports rising nearly 14% in the week ending November 2.

While some effects from previous surges in exports may hinder growth in the coming months, analysts at Goldman Sachs, led by Xinquan Chen, predict that China’s export growth will remain strong in 2026 due to structural advantages.

Another report released last week showed that China’s current account balance surged to a record $196 billion in the third quarter, propelled by a goods trade surplus of $270 billion.