China's trade surplus reached $1.04 trillion for the first ten months of 2026, putting it on pace to exceed last year's record $1.2 trillion full-year surplus, according to customs data released Tuesday.

Exports jumped 35.2% in October from a year earlier, beating Reuters-polled estimates of 33.5%, while imports surged 41.6%, the strongest monthly rise since May 2021. The import surge was driven by demand for AI-related tech goods, critical minerals including copper, and energy supplies including liquefied natural gas, oil and coal. High-tech product imports soared 72% in value, while crude oil, LNG and coal imports grew 41%, 50% and 60% respectively.

Lynn Song, chief economist for Greater China at ING Bank, said China remains on track for a record trade surplus by year-end despite October's softer-than-expected surplus growth. The strength in exports has allowed policymakers to meet the country's 4.5%-5% growth target while retail sales grew only 1.1% in September, reflecting weak domestic consumption.

The International Monetary Fund has repeatedly urged China to boost domestic demand and reduce its reliance on exports. Trading partners have raised concerns over Chinese exports undercutting local industries.

China's bilateral surplus with the U.S. reached $32.7 billion in October, with exports to America up 32.9% year-over-year. Exports to the European Union grew 24.4% while imports dropped more than 4%, widening the EU surplus to $33.4 billion. The EU and China agreed last month to limit Chinese hybrid vehicle imports over coming years, capping imports at 350,000 annually starting December 1, above last year's 300,000 hybrids exported but below the recent 800,000-unit annualized pace.

Yuanliu Hu at Citi Research estimates export growth could slow to 8% in 2027 as favorable base effects fade and global AI investment moderates. Trade friction with the EU and the December expiration of the U.S.-China trade truce pose risks to momentum. Presidents Xi Jinping and Donald Trump meet next week at an APEC leaders' summit in Shenzhen.

Investors monitoring China's trade balances should watch for signals from the Xi-Trump meeting and any signs of slowing global AI investment.