China's Record Trade Surplus Masks 38-Month Factory Deflation

• China's trade surplus exceeded $1 trillion in November, with exports growing despite US tariffs.
• Factory deflation worsened and extended to its 38th consecutive month, reflecting complex economic realities.
• Exports to the US declined by 29%, but overall exports rose due to increased trade with Southeast Asia, Africa, Europe, and Latin America.
• Persistent factory deflation indicates falling industrial profits, weak domestic demand, overcapacity, and a risk of recession.
• China's GDP deflator is projected to decline for a third consecutive year in 2025, the longest streak since the late 1970s.

Why It Matters: China's persistent factory deflation despite trade surplus signals global economic risks.