China’s export sector saw a strong rebound in September, with growth reaching 8.3% year-on-year – the fastest pace since March. This positive development offers temporary relief to Beijing as it navigates heightened tensions with Washington. President Trump has threatened to impose triple-digit tariffs on Chinese rare earth exports as a response to China’s recent restrictions. Despite growing friction, China’s diversified trade strategy is showing success. Exports to Europe, Southeast Asia, and Africa surged by 14%, 15.6%, and 56.4% respectively, while shipments to the United States fell sharply by 27%. Experts attribute this shift to Chinese companies aggressively expanding into new markets, capitalizing on cost advantages while facing declining US demand. However, this rapid expansion comes at a price for exporters: they’re competing fiercely for market share, squeezing profits and forcing factories to cut wages or lay off employees. This competitive pressure is prompting Beijing to consider domestic stimulus measures as weak consumer demand continues to hinder growth. Import activity also surged in September, rising 7.4% year-on-year, the fastest increase since April 2024, driven by stockpiling of raw materials like steel, coal, and soybeans. While this indicates increased industrial activity, analysts caution that it may be primarily due to strategic restocking rather than a surge in household consumption. China’s trade surplus narrowed slightly to $90.45 billion from $102.33 billion in August, reflecting the evolving trade environment. However, economists warn that if President Trump’s tariff threats materialize, they could trigger deflationary shock and negatively impact jobs in China’s export sector. Both China and the US are expected to engage in diplomatic talks ahead of the APEC summit later this month. However, analysts anticipate a continued cycle of tension, escalation, and negotiation as the world’s two largest economies continue their trade negotiations.