Donald Trump’s trade war has backfired. He imposed tariffs, and China has responded with a trade surplus of well over a trillion dollars. In other words, China has beaten Trump’s tariffs.

The latest figures are out, and China remains an exporting powerhouse. Its trade surplus is well above $1 trillion: that means China sells far more than it buys, with the gap between the two exceeding that mark. It first crossed the trillion-dollar threshold in 2025, and this year it has done so again.

But this strength also hides a major weakness inside China’s economy. The problem is domestic demand, which remains weak. Chinese people are not spending. Domestic car sales remain low, and the housing market remains weak too.

This year, the government launched an initiative to encourage spending: a consumer trade-in programme. It is essentially a discount for households. If they want to upgrade their appliances or buy new gadgets, they get a discount on those purchases, with the Chinese state paying part of the bill.

So where does that leave China? Exports remain its main engine of growth. But look more closely, and that strength is also a dependence. China needs the global market to keep its economy going because, back home, consumers are not spending.