China’s exports shrank unexpectedly in October, Beijing’s official commerce data showed, dragged down by a sharp fall in shipments to the U.S. amid the trade battle with President Donald Trump.
Beijing’s grip on rare earths processing is a major problem for the U.S. and its advanced manufacturing sector. But the drop in exports highlights Trump’s substantial leverage over China, whose exporters—the engine of its economy—still rely heavily on American demand, despite Beijing’s recent efforts to diversify its markets beyond the U.S., such as in Europe and Southeast Asia.
China Exports Data
There was a 25 percent drop in Chinese shipments to the U.S. during the month, according to the data released Friday. This was compounded by a 1.1 percent drop in China’s global exports in October compared to a year earlier, the weakest since February, following an 8.3 percent increase in September.
October 2024 was a high comparable base, which sharpened the fall this year, because American firms had loaded up their inventories in anticipation of a Trump victory and a renewed trade war with China. But that frontloading of inventory is over—and it spells bad news for China in the coming months.
China’s shipments to the U.S. have already fallen by double-digits for seven consecutive months. A Reuters poll of analysts had forecast a 3 percent rise in October after September’s strong performance.
Alicia Garcia-Herrero, chief economist for the Asia-Pacific at Natixis, told Reuters that “it’s going to be much tougher for China in the fourth quarter, which means it’s going to be tougher in the first half of 2026 as well.”
Trump-Xi Meeting
At their meeting in South Korea in late October, Trump and Chinese President Xi Jinping agreed to lower tariffs and postpone new port fees they had imposed on each other’s vessels.
China paused some of its export controls on rare earths for one year and agreed to purchase more soybeans and other farm products from the U.S. The U.S. eased some sanctions on Chinese companies.
Goldman Sachs economists said following the Trump-Xi meeting that they expect Chinese export volumes to grow by 5 percent to 6 percent annually, helping China to gain global market share and driving its overall economic expansion.
“The reduction in some of these tariffs as part of the latest U.S.-China trade ‘deal’ may provide a small boost to exports,” Leah Fahy and Zichun Huang, China economists at Capital Economics, wrote in a recent note.
But that won’t show up until later in the last quarter of this year, they said.
Imports rose 1 percent in October, compared with a 7.4 percent growth in September year-on-year. Economists said a prolonged property sector downturn and weak domestic consumption remain a concern.
This article uses reporting by The Associated Press.