China's trade surplus reached a record $1.2 trillion in 2025, demonstrating the resilience of the world's second-largest economy amid ongoing trade tensions. The milestone reflects China's successful strategy of diversifying export markets as traditional trade relationships face challenges.

December Trade Performance Shows Strong Momentum

China's export performance accelerated in December, with overall exports increasing 6.6% year-on-year, marking the fastest growth in three months according to Bloomberg. The robust performance was accompanied by imports rising 5.7%, exceeding expectations and resulting in a monthly trade surplus of $114.00 billion, the highest in six months.

Export Diversification Strategy Yields Results

The trade data reveals a significant shift in China's export destinations, with the US share of China's total exports falling to a record low of 11% in 2025. This decline reflects the impact of tariff measures and China's strategic pivot toward alternative markets across multiple regions.

Africa emerged as the standout growth market, with exports surging 26% compared to the previous year, representing the fastest growth rate among major regions. Southeast Asian ASEAN countries recorded a 13% increase in shipments, while the European Union and Latin America saw more modest but still positive growth of 8% and 7% respectively.

US Trade Relationship Faces Continued Pressure

Exports to the United States experienced a sharp contraction, falling 20% for the full year 2025. December witnessed one of the most significant monthly declines in US-bound shipments, dropping more than 30%. This deterioration underscores the ongoing impact of tariff policies on bilateral trade flows.

Economic Implications and Market Dynamics

The expanding trade surplus highlights the persistent imbalance between China's robust manufacturing capabilities and domestic consumption patterns. While export-driven growth continues to support the economy, the data reflects underlying challenges including a prolonged real estate downturn and reduced domestic investment, which limit demand for imported goods.

Chinese manufacturers have demonstrated remarkable adaptability in seeking new markets despite global economic protectionism concerns. The successful diversification across Africa, Latin America, and other regions indicates the competitiveness of Chinese products in emerging markets, even as traditional developed market relationships face strain.

China has implemented a significant regulatory change by raising the minimum margin requirement for financing securities purchases to 100% across its major stock exchanges, marking the latest effort by authorities to strengthen risk controls in the capital markets.

New Margin Requirements

Under the revised regulations, investors must now provide margin equal to the full value of securities they purchase on credit. This represents a substantial increase from the previous threshold of 80%, effectively tightening access to leveraged trading.

Exchange Coverage

The new margin financing rules apply comprehensively across China's three major stock exchanges:

• Shenzhen Stock Exchange
• Shanghai Stock Exchange
• Beijing Stock Exchange

The uniform implementation across all major trading venues ensures consistent risk management standards throughout China's equity markets.

Regulatory Intent

This margin requirement adjustment underscores Chinese regulators' ongoing efforts to tighten risk controls within the capital markets. By requiring full collateralization of credit-financed securities purchases, authorities aim to reduce systemic risks associated with leveraged trading activities.

The move reflects a broader regulatory approach focused on market stability and investor protection, ensuring that securities financing activities operate within more conservative risk parameters. This change effectively eliminates the leverage component that was previously available through the 20% gap between the old 80% requirement and full collateralization.