Vandelay Industries put up some big trade numbers on Tuesday.

On a monthly basis, China’s surplus was actually the narrowest in five months in October, Beijing said. And yet, at more than $105 billion, the gap was large enough to push this year’s overall imbalance beyond 13 figures.

So, for the second consecutive year, Xi Jinping has notched a $1 trillion surplus.

Here comes the same (tired, old) joke: If surpluses are evidence of “winning” on trade as Donald Trump insists, Xi’s winning to the tune of trillions.

The same caveats apply. First, higher prices, particularly for chips and AI-related equipment, but also for raw materials, are ballooning these figures. Computer equipment by itself is responsible for nearly half of the overall increase in the value (as distinct from volume) of China’s shipments abroad this year.

Second, and more broadly, this isn’t sustainable. To repeat my ad nauseam talking point: Even if it were politically feasible for China to keep flooding the world with cheap goods — and it isn’t — it’s not mathematically possible. Global demand simply can’t keep up.

Note that the surplus with the EU widened to $310.70 billion for the year, which is to say a third of China’s overall gap is attributable to trade with Europe.

Brussels has had (well more than) enough of that dynamic, and if recent efforts to “correct” the situation fail, Europe may have to take a harder protectionist line.

The narrowing of China’s monthly surplus came courtesy of a 42% increase in imports, the largest jump in half a decade. In dollar terms, exports rose a “more modest” (note the scare quotes) 35%.

If you look at volume instead of value, you’ll discover that China’s export machine still runs on EVs, batteries and solar panels. So, it’s not all about AI-related hardware and prices increases for computer components.

If you’re curious as to whether the enormous jump in the value of imports reflects a domestic demand revival, the answer’s “of course not.” China remains stuck in a disinflationary quagmire, as evidenced by Monday’s wholly lackluster headline and core inflation readouts.

Rather, the import boom appears to have been driven in no small part by Beijing’s efforts to rebuild its oil stockpiles after pulling back from the market during the early months of the war to avoid exacerbating the supply shock.

The figure above shows you the rebound in crude imports, which were the highest in October since the start of the Iran war, albeit down more than 13% from the same month a year ago.

In value terms, China’s crude imports were the highest in four years last month, Tuesday’s data showed. Monday’s PPI release showed factory-gate inflation ran 5.7% in October, the fastest since 2022.

All in all, this was the same story, different month. The surplus is huge, exports are still booming (with the two standing caveats), import growth isn’t indicative of domestic demand and if your definition of “winning” is a trade imbalance, Art Vandelay’s a winner.