China Export Boom Sets Up High-Stakes Trade Talks at APEC Summit

China’s Economy Takes a Pre-Golden Week Holiday Turn

China exports captured market focus, soaring 8.3% year-over-year in September despite US tariffs and levies on transshipments. Exports increased just 4.4% in August. Crucially, imports surged 7.4%, up sharply from 1.3% in August, suggesting resilient demand and robust exports in October.

CN Wire reported on China’s year-on-year exports to key trading partners for January to September. These included:

• ASEAN: +9.6%.
• EU: +5.2%.
• S. Korea: +2.0%.
• Japan: +5.9%.
• Meanwhile, exports to the US dropped 14.9%.

September’s data showed China had successfully rerouted exports, countering the effect of US tariffs on demand. Crucially, a sustained rebound in external demand would raise expectations that Beijing will achieve its 5% GDP growth target.

Ahead of the latest numbers, the World Bank raised its 2025 growth forecast for China to 4.8%, up from April’s 4.0% projection.

Export Realignment Boosts Growth Prospects

Brian Tycangco, editor at Stansberry Research, commented on the China data, stating:

“China’s trade bounces back in September. Exports surge 8.3% while imports jump 7.4%. Trade surplus narrows slightly. No. Trump’s trade war is not inflicting heavy damage to China’s export sector. Exporters are finding new markets to sell products.”

The trade data was good news for Beijing and Chinese manufacturers. Furthermore, the demand rebound suggests that Trump’s efforts to pressure economies into reducing reliance on Chinese goods failed, potentially triggering US threats of additional tariffs. An escalation in the US-China trade war reminded markets of the uncertain path toward a trade deal.

Notably, last week’s escalation in US-China trade tensions and the weekend’s de-escalation put soybean imports and rare earth exports in the spotlight.

Soybeans and Rare Earths in Focus

Soybean imports increased to a September record 12.87 million metric tons. The September numbers could set the stage for constructive US-China trade negotiations, potentially at the APEC Summit.

Before the Golden Week holiday, President Trump criticized China for cutting soybean imports, stating:

“The Soybean farmers of our Country are being hurt because China is, for ‘negotiating’ reasons only, not buying. We’ve made so much money on Tariffs that we are going to take a small portion of that money and help our farmers. I will never let our farmers down.”

While there was no US administration retaliation, Beijing’s announcement of fresh controls on rare earth exports caused a stir. A reported ban on rare earth exports triggered the US administration to raise tariffs on Chinese shipments by a further 100%, fueling a flight-to-safety.

However, Beijing clarified its policy adjustment on rare earth exports, stating that there would be no ban and approvals for compliant export applications for civilian use would continue as normal.

Despite these assurances, actual rare earth exports still declined significantly, a potential issue in trade talks. Rare earth exports fell 31% to 4,000.3 tonnes. Furthermore, exports decreased by 11% to 42,936 tonnes year-over-year from January to September.

Labor Market and Consumption Outlook

While the latest data will set the stage for trade negotiations, the upswing in demand could be crucial for China’s labor market and Beijing’s push for private consumption.

Chinese manufacturers reduced staffing levels for the third time in four months in September. While demand improved, pricing pressures forced firms to reduce fixed costs to protect their bottom lines. However, margin pressures could ease if external demand continues to recover, potentially lifting employment.

Rising salaries and employment could boost consumer sentiment and spending, fueling demand-driven inflation.

For context, China’s unemployment rate has trended higher in 2025, while retail sales have trended lower, aligning with the timing of US tariffs and margin squeezes. The unemployment rate increased to 5.3% in August, up from 5.2% in July and 5.0% in June. Retail sales rose 3.4% year-on-year in August, down from 3.7% in July and 4.8% in June.

Non-US Trade Expansion Gains Momentum

China’s success in rerouting shipments and forging new trade terms to counter the slump in US demand bodes well for the fourth quarter.

Shehzad Qazi, managing director at China Beige Book, commented:

“Shipments to the US plunged 27%–the sixth month of double-digit declines—a slump more than offset by strong growth in sales to regions like the European Union. In total, exports to non-US destinations grew 14.8%, the fastest since March 2023.”

Qazi identified other key trade developments, including a 56% surge in shipments to Africa. Exports to LATAM were up 15.2%, reversing declines in the previous two months.

Mainland Equity Markets Steady Following Trade Jitters

Mainland equity markets were in recovery mode on Tuesday, October 14. Market tensions eased after Friday’s escalation and the weekend’s de-escalation in the US-China trade war.

The CSI 300 advanced 0.89% in early trading, while the Shanghai Composite Index gained 0.68%. Tuesday’s recovery sent the pair toward their 2025 high, set on October 9.

Traders are betting on a US-China trade deal and on Beijing achieving its 5% GDP growth target, aided by policy measures targeting demand.

Punitive US tariffs on transshipments haven’t hurt the Chinese economy and have lifted demand for Mainland-listed stocks. The CSI 300 has rallied 17.9% year-to-date in 2025, with the Shanghai Composite Index up 16.8%. For contrast, the Hang Seng Index has soared 29% year-to-date.

While analysts are optimistic about further gains through the remainder of Q4, downside risks from renewed trade tensions linger. Last week’s escalation underscored the lingering threat of a breakdown in US-China relations to global markets.

What’s Next: Data, Trade Headlines, and the APEC Summit

September’s latest data and recent US-China trade developments set the stage for a crucial second half of October.

Consumer and producer prices will face scrutiny on Wednesday, October 15. Producer prices will reveal whether manufacturers continue facing intense margin pressures. Easing deflationary pressures would signal rising margins, potentially supporting the labor market and consumption.

However, the APEC meeting could be pivotal, given that President Trump and President Xi plan to discuss trade policies. A trade deal, including reduced US tariffs, would likely lift sentiment, sending Mainland-listed stocks higher. Conversely, the absence of an agreement to lower US tariffs may derail the 2025 rally.

Discover strategies to navigate this week’s market trends here.