Export engine may stall as limits reached

By the Editorial Team · Thursday, October 8, 2026

Goldman Sachs forecasts that China’s exports could grow by up to 8 percent annually in the coming years, driven by strong supply-side factors despite declining industry profits. However, the rapid expansion faces limits as many trading partners, especially low-income countries with large trade deficits, may struggle to absorb more Chinese goods without economic growth outside China.

China’s export sector continues to demonstrate robust growth potential in the near term, but many of its trading partners may be nearing the limits of their ability to absorb increasing volumes of Chinese goods, according to a recent report by Goldman Sachs.

The report, led by chief China economist Hui Shan, projects that China’s real exports could expand by as much as 8 percent annually in the coming years, even amid a record trade surplus of approximately US$1.2 trillion in 2025. This export growth has largely been driven by supply-side factors, with export volumes increasing steadily since 2021 despite declining profitability in various industries. For instance, the value of automotive exports nearly doubled between 2021 and 2025, while industry profit margins in the sector dropped from 6.4 percent to 4.8 percent during the same period.

However, the report also highlights potential long-term challenges for China’s export expansion. Many of China’s trading partners are experiencing significant trade deficits with the country, which could eventually restrict their capacity to further increase imports. According to the analysis, such deficits cannot grow indefinitely without creating balance-of-payments pressures.

In 2025, 82 countries recorded trade deficits with China exceeding 3 percent of their gross domestic product (GDP), a substantial increase from just 24 countries in 2005. Notably, 67 of these deficit countries are classified as low-income and some have limited foreign-exchange reserves to sustain ongoing deficits. These nations collectively accounted for 44 percent of China’s total exports, underscoring their importance to China’s trade landscape.

Customs data indicate that China’s cumulative trade surplus reached US$805.51 billion in the first eight months of 2026, an increase of about 3 percent compared to the same period in 2025. While this suggests continued strong export performance, industry analysts caution that sustained growth will increasingly depend on stronger economic expansion among China’s import partners to maintain demand.

The Goldman Sachs report concludes that while China’s export engine maintains momentum in the short term, its future growth will face constraints unless there is broader economic strengthening in overseas markets to support further import increases.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.