Why China Is Pushing Trade Facilitation Despite a Record Surplus
By Leigh Wedell and Ruihan Huang
February 12, 2026
Your talking points
Unsplash / Zalfa Imani
Shortly after announcing a record trade surplus of roughly US$1.2 trillion, Chinese authorities introduced 25 new trade facilitation measures in January 2026.
The counterintuitive sequence of announcements reflects policymakers’ concern that trade remains a critical but vulnerable pillar of growth.
With domestic demand still subdued and external conditions still volatile, the focus is not only on expanding trade volumes but increasingly on ensuring that trade flows remain stable, predictable, and resilient while shifting export growth toward emerging markets.
Beyond the Points
Record trade surplus does not eliminate exposure to external shocks.
Despite the headline surplus, Chinese policymakers remain focused on potential risks. External pressures—from tariffs and export controls to supply-chain re-routing—are intensifying at a time when China’s growth model still relies heavily on trade, which accounted for nearly one-third of economic growth in 2025, while unlocking domestic consumption remains a persistent challenge for the broader economy.
In this context, easing trade frictions is not merely about lifting export performance in the short term. Rather, it reflects an effort to manage forward-looking risks, reinforce the resilience of trade flows, reduce structural transaction costs, and safeguard a core pillar of growth amid persistent geoeconomic volatility. This worst-case scenario planning is not new, but the latest package underscores how central it remains to current policy thinking.
Nationwide trade facilitation measures are scaled from local-level pilots.
As is so often the case with the Chinese policy making process, the latest package represents a continuation and gradual deepening of existing reforms rather than a policy shift. Since 2018, China’s customs and regulatory authorities have rolled out annual trade facilitation initiatives, cumulatively introducing more than 115 measures by 2024.
This approach has relied heavily on pilot testing before nationwide implementation. In April 2025, 25 major cities, including Beijing, Shanghai, Tianjin, and Chongqing, launched a new round of pilot programs. Over a five-month period, these cities tested 29 experimental measures aimed at practical improvements, such as expediting customs clearance, improving logistics coordination, and reducing compliance burdens. The recently announced measures represent a nationwide scaling-up of the most effective pilots, signaling adherence to China’s characteristic “pilot-then-scale” model.
Reforms target trade mechanics and simplify import procedures.
Many of the measures focus on improving the mechanics of trade, with three major objectives: streamlining customs procedures, reducing logistics and administrative costs, and shortening tax rebate and refund cycles.
At the same time, the package is not solely export oriented. Several measures are also aimed at simplifying import procedures and lowering compliance costs for firms bringing goods into China, including foreign companies. Examples include optimizing customs clearance for medicine–food ingredients to address rising demand for higher-quality health and wellness products, expanding pilot programs that integrate certification requirements for imported motor vehicles, and supporting cross-border e-commerce channels that facilitate the entry of overseas consumer goods.
By lowering restrictions on imports that Chinese consumers demand, policymakers are attempting to broaden consumer choice and therefore stimulate domestic consumption.
There is a greater focus on higher-value products amid rising overseas challenges.
Another objective of the package is to support sectors that have become increasingly important to China’s export growth, particularly higher value-added industrial products such as lithium batteries, new energy vehicles, and energy storage equipment. These industries account for a growing share of recent export gains and represent areas where Chinese firms dominate.
However, many of these sectors are subject to cross-border regulatory frictions, including tariffs, subsidy investigations, and market access restrictions. In this context, improving trade procedures and lowering administrative costs could not only stabilize these exports but also help offset external pressures and sustain export momentum amid increasingly challenging conditions in overseas markets.
China is diversifying their trade market – mainly away from the U.S. market.
The measures are also consistent with China’s continuing efforts to reduce reliance on the U.S. market while expanding trade ties elsewhere. In 2025, Chinese exports to the U.S. dropped by 20%, and the U.S. accounted for just 11% of China’s total exports last year, a record low. This shift aligns with the Trump Administration’s push to rebalance bilateral trade.
China offset this decline through stronger export growth in emerging markets. Exports to ASEAN, LATAM, and Africa grew by 13.4%, 7.4%, and 25.8%, respectively, well above China’s overall export growth rate of 5.5%. Beijing has also sought to secure incremental gains in other developed markets. In January, Canada announced it would drastically lower tariffs on Chinese new energy vehicles (NEVs) from 100% to 6.1%, reinforcing China’s push toward a more diversified trade network.
Key implications
For foreign business there are tangible opportunities.
Beyond the reduction of administrative friction, import-focused firms should pay close attention. The package offers tangible benefits for companies bringing goods into China to support manufacturing for export or domestic sales, particularly in the consumer, healthcare, automotive, and e-commerce sectors, as well as firms sourcing goods from China.
More broadly, the measures reflect a pragmatic and incremental policymaking approach. While structural challenges remain, we have observed a continued willingness among local authorities to work with foreign companies on complex trade issues—including, in some cases, tariff-related matters—where commercial and policy objectives align. As such, proactive engagement with officials and stakeholders across the Chinese system remains an important part of managing trade-related risks in China.
Published by Basilinna Institute. All rights reserved.
