When Donald Trump returned to office a year ago pledging an America First agenda, many economists expected China’s already slowing economy to come under renewed pressure. Instead, Beijing has capitalised on shifting global alliances, repairing strained relationships with key partners and posting a record trade surplus.
Trade Surplus Hits Record as China Courts New Partners
Analysts say China has responded to strained US relations with its traditional allies by deepening ties with other major economies, including Canada, India and parts of Europe. As a result, China’s trade surplus surged to a record $1.2 trillion in 2025. Monthly foreign exchange inflows climbed to an all time high of around $100 billion, while global use of the yuan continued to expand.
When British Prime Minister Keir Starmer arrives in China on Wednesday for a four day visit, analysts expect Beijing to press its advantage further. The trip marks the first visit by a UK prime minister since 2018 and follows a recent visit by Canadian Prime Minister Mark Carney.
During Carney’s visit, China and Canada agreed to dismantle trade barriers and pursue a new strategic relationship. Carney described China as a more predictable and reliable partner, language increasingly echoed by other governments unsettled by Washington’s policies.
China Positions Itself as a Stable Economic Power
Backed by a $20 trillion economy and $45 trillion in stock and bond markets, China is presenting itself as a steady global partner. Aleksandar Tomic of Boston College said Beijing had successfully framed itself as reliable at a time of uncertainty. Derrick Irwin of Allspring Global Investments said China was offering predictability as US trade policy became harder to navigate.
While the US raised tariffs on Chinese goods to more than 100 percent in April before partially reversing course, China redirected exports elsewhere. Shipments to the US fell 20 percent in 2025, yet exports rose sharply to Africa, Latin America, Southeast Asia and the European Union.
Despite weak domestic consumption and a prolonged property downturn, China still met its official growth target of 5 percent in 2025. Authorities also rolled out measures to attract foreign investment, including pilot schemes to open sectors such as healthcare, telecoms and education.
Yuan Gains Ground as Dollar Appeal Wanes
China’s financial position has strengthened alongside trade. Foreign exchange reserves reached a 10 year high of $3.36 trillion, while equity markets outperformed US stocks. More than half of China’s cross border transactions are now settled in yuan, compared with almost none 15 years ago.
Bankers say global lenders are racing to boost yuan liquidity as Trump’s unpredictable diplomacy weakens confidence in the dollar.
Caution Remains Despite China’s Outreach
Still, analysts warn that warmer trade ties do not equal full trust. Patricia Kim of the Brookings Institution said many countries remain wary of China’s trade practices, economic coercion and unresolved maritime disputes.
While China currently appears more pragmatic than Washington, she said, its underlying behaviour has yet to reassure all partners.
with inputs from Reuters
