China’s export engine retains room to expand, but its longer-term prospects may increasingly depend on whether overseas economies can generate enough growth to absorb rising volumes of Chinese products. A Goldman Sachs report led by the American investment bank’s chief China economist Hui Shan said that exports could maintain strong momentum for several more years, but warned that external constraints could become more significant over time.
“At least over the next few years, there is still room for Chinese exports to maintain their strong momentum,” the analysts said in the report on Wednesday. “Over the longer term, however, stronger economic growth in importing economies will be required for continued Chinese export gains.” Even under Goldman Sachs’ most conservative projection, China’s real exports could grow by 8 per cent annually in the near term, despite the country recording a record US$1.2 trillion trade surplus last year.
The report attributes much of China’s export strength since 2021 to supply-side factors rather than a corresponding improvement in profitability. Export volumes have continued to rise even as profit margins across industries have weakened. The automotive industry illustrates the pattern: export value nearly doubled between 2021 and 2025, while profit margins declined from 6.4 per cent to 4.8 per cent.
For Goldman Sachs, the issue is not simply whether Chinese manufacturers can continue producing goods for overseas markets, but whether those markets can continue financing the resulting imports. The analysts said an increasing number of countries were already running substantial trade deficits with China, potentially creating a limit on their capacity to increase imports further.
“Trading partners’ trade deficits cannot rise indefinitely,” the report’s authors said. “The sharp increase in the number of countries already facing large and still-rising deficits with China points to balance-of-payments constraints for some of China’s trading partners.”
The scale of the shift is reflected in the number of countries running sizeable deficits. In 2025, 82 countries recorded trade deficits with China equivalent to more than 3 per cent of their gross domestic product, compared with 24 countries in 2005. Sixty-seven of those countries were low-income economies, according to the report, with some possessing limited foreign-exchange reserves with which to finance persistent deficits. Collectively, the countries accounted for 44 per cent of China’s total exports.
The findings come as China’s trade surplus continues to attract political criticism abroad. Western governments have for years challenged aspects of Beijing’s export model, particularly as Chinese goods have gained market share in overseas economies. European Commission President Ursula von der Leyen recently warned that a “second China shock” was already affecting Europe and pledged to use available tools to rebalance trade.
The pressure is also reflected in Beijing’s own policy language. In July, the Politburo, a major decision-making body led by President Xi Jinping, called for efforts to “expand the scope for mutually beneficial international economic and trade cooperation” and “promote more balanced trade development”. The statement came amid growing concern among Western politicians about the widening Chinese trade surplus.
Yet China’s external trade remains substantial and continues to expand. Customs data showed that the country’s cumulative trade surplus reached US$805.51 billion in the first eight months of 2026, about 3 per cent higher than during the same period last year. The latest trade figures are due to be released next week.
The Goldman Sachs assessment therefore distinguishes between China’s near-term export capacity and the constraints that may emerge later. Chinese exports can continue growing even as profitability comes under pressure, but the report argues that sustained gains over a longer period will require stronger economic growth among importing countries. For economies already running large deficits with China, particularly low-income countries with limited foreign-exchange reserves, the ability to absorb ever larger volumes of Chinese exports may become increasingly constrained.
