The final numbers are in. When it was all said and done for 2025, China’s overall trade surplus was a staggering $1.2 trillion, up $200 billion from 2024 and a record.

That’s according to customs data released on Wednesday, when Beijing said shipments abroad rose nearly 7% from a year earlier in December, more than double consensus and ahead of every estimate.

It’s not that Donald Trump’s tariffs aren’t “working.” Shipments to the US fell by a third last month versus December of 2024. Rather, it’s that China simply made up the difference by ramping up exports to other locales.

For the full year, exports to the US dropped by 21% and comprised just 11% of total Chinese exports, a record low. But shipments to China’s sphere of influence (“This is OUR hemisphere,” as Trump might put it) rose 13%, while exports to Europe rose 8%. China flooded Africa with its wares — export growth there was more than 25%.

Although the muscular export figures helped bolster growth, this isn’t necessarily a good news story for Xi Jinping. In many ways, China’s reliance on exports is a liability to the extent Europe (for example) is wary of the risk to domestic manufacturers from cheap Chinese competition. And thereby predisposed to a more aggressive stance on trade barriers.

And the very fact that Beijing has so much to send abroad reflects an overcapacity problem which in turn points to the Party’s biggest economic concern for 2026: Stagnant domestic demand.

Speaking of domestic demand, imports in December expanded nearly 6%, much better than expected.

As the white line in the figure shows, last month’s YoY jump in imports counted as the second-strongest print of 2025.

And yet, there’s scant evidence to suggest the consumption impulse is anything other than tepid. Yes, headline consumer prices posted their largest increase in nearly three years in December, but the fact that 0.8% counts as “quick” says a lot about Beijing’s success (or lack thereof) in pulling China back from the brink of deflation.

Core CPI ran 1.2% in December against a much smaller increase excluding food, with the disparity indicative of lackluster underlying price growth.

Although December’s PPI print wasn’t as bad as it could’ve been, the 1.9% decline marked the — checks notes — 39th straight negative readout, which is to say China’s now in its fourth year of factory gate deflation.

Note also that a previously obscure CPI category called “miscellaneous goods and services” posted yet another blockbuster gain, rising nearly 17.5% in December.

As discussed here last month, that category counts jewelry. The figure below gives you a sense of the dynamic.

Bottom line: The apparent uptick in Chinese inflation’s driven in part by the historic rally in the precious metals complex.

Needless to say, soaring food costs (vegetable prices rose almost 20% in December) and a once-in-a-century gold rally aren’t reliable drivers of healthy inflation.

For the full year, inflation in China was… well, it wasn’t. There was no overall inflation in China on net in 2025. And the deflator spent a third year in negative territory, something that’s never happened in the modern history of Chinese macro data.

So, in the final analysis, 2025 was a year during which China succeeded in keeping the export machine humming despite Trump’s best efforts to squeeze the country’s foreign trade. And it’s a good thing because nothing else was working for Xi, his self-congratulatory propagandizing notwithstanding.