China's Huge Trade Surplus Brings Limited Boost To Forex Reserves

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A Henan-based writer says that, amid the recent political turmoil in Venezuela and rising social unrest in Iran, Beijing will have to fine-tune its renminbi internationalisation plan.

The pressure could intensify after Trump said on Monday that countries doing business with Iran would face a new 25% tariff, a move that could make Chinese goods significantly more expensive in the US, given China's strong trade ties with Iran.

Fabricated export records

In fact, the record-high trade surplus runs counter to widespread impressions that many manufacturers are leaving China for Southeast Asia, including Vietnam, Thailand and Indonesia, leaving large numbers of factory workers unemployed.

Some overseas commentators said China's export data might have been inflated. They alleged that some companies bought invoices to create fictitious export records for tax rebate claims.

In one case, a company in Liaoning fabricated export transactions to illegally obtain tax rebates worth 212 million yuan (US$30 million). Another case was disclosed in July 2024, when police in Wuhan said they had dismantled an export tax rebate fraud ring involving a small supply-chain firm that fabricated export records linked to more than 200 million yuan in offshore cargo value and claimed about 27 million yuan in rebates using fake invoices.

A commentary published by Shanghai Metals Market, a Shanghai-based news outlet specializing in nonferrous metals trading, said that fake invoice-based exports accounted for about 30% of China's steel exports in 2023 and 2024.

It remains unclear how these cases have distorted China's trade statistics, as the government has not released a comprehensive national estimate that covers all such illegal activities. In March last year, the central government unveiled a new set of rules to crack down on these practices, effective on October 1, 2025.

Pessimistic outlook

Wang Jun, vice head of the General Administration of Customs, said in a media briefing on Wednesday that China's trade performance last year was supported by a combination of policy support, domestic demand and industrial strength.

He said key drivers behind last year's strong trade growth include:

Policy support: Central and local governments rolled out targeted measures to help exporters secure orders and expand markets. Customs authorities piloted 29 trade‐facilitation policies, now being expanded nationwide, helping cushion external shocks.

Domestic market demand: China's large consumer base underpinned import demand as the economy recovered. In the first three quarters, China was the main export destination for 79 countries and regions, with full‐year imports reaching 18.48 trillion yuan, about 10% of the global total.

Industrial strength: China's complete industrial system and integrated supply chains sustained export growth. Manufacturing exports have expanded for nine consecutive years, led by equipment manufacturing, which accounted for nearly 60% of total exports.