China current account surplus widens sharply in Q2

China’s current account surplus surged to a record USD 135.1 billion in the second quarter of 2025, up sharply from USD 55.5 billion in the same period last year, according to preliminary estimates.

The jump was primarily driven by a widening goods trade surplus, which climbed to USD 219.1 billion from USD 163.4 billion a year earlier. Exports rose 5.7% to USD 871.8 billion, buoyed by strong demand for electronics, machinery, and new energy products, while imports declined 1.3% to USD 652.8 billion, reflecting both weaker domestic consumption and lower commodity prices.

The services balance also improved, with the deficit narrowing to USD 46.5 billion from USD 61.7 billion, largely due to a smaller outflow in outbound tourism and transportation services.

Meanwhile, the primary income deficit edged down to USD 41.4 billion from USD 48.9 billion, suggesting a moderation in profit and dividend payments to foreign investors. The secondary income surplus — which includes remittances and transfers — increased to USD 4.0 billion from USD 2.7 billion in Q2 2024, adding a modest but positive contribution to the overall balance.

Taken together, the data points to a combination of resilient export performance, subdued import demand, and a gradual rebalancing in service trade, all of which have reinforced China’s external surplus to unprecedented levels.

This may bolster foreign exchange reserves and provide near-term support for the renminbi, but could also reignite trade tensions with key partners given the scale of the imbalance.