In the early to mid-1980s, Japan experienced a sharp surge in exports, particularly to the United States, underpinned by its booming industrial base in automobiles, electronics, and machinery. This expansion, while driven in part by competitive advantages in manufacturing, was also heavily influenced by mounting political pressure from Washington as Japan’s trade surplus widened rapidly. In anticipation of looming protectionist measures — including tariffs, quotas, and so-called “voluntary” export restraints—Japanese exporters began strategically front-loading shipments to secure market share before restrictions took effect. This sudden acceleration in outbound volumes created the illusion of a strong and sustained uptick in global demand, even though it was primarily a tactical response to policy risk. The urgency behind these front-loaded exports became particularly evident in the months leading up to the Plaza Accord in 1985, an agreement between the G5 economies to realign exchange rates and weaken the U.S. dollar. For Japanese exporters, the prospect of a sharply appreciating yen threatened to erode their global competitiveness. As a result, shipments intensified as companies sought to capitalize on a still-favorable exchange rate. The outcome was a temporary distortion in trade data—a spike in export figures that masked the fragile reality beneath. Once the yen appreciated following the Accord, profit margins came under severe pressure, and export growth slowed dramatically. What had appeared to be a robust external sector was revealed to be a front-loaded and unsustainable cycle.
Fast forward to the present, and a similar dynamic may be unfolding in China. In the first seven months of 2025, China’s total imports and exports reached RMB 25.7 trillion (USD 3.58 trillion), marking a year-on-year increase of 3.5 percent. Notably, export growth outpaced the broader trade balance, rising by 7.3 percent to RMB 15.31 trillion, while imports fell by 1.6 percent to RMB 10.39 trillion. Although the decline in imports narrowed slightly compared to the first half, the diverging trends suggest export strength may be offset by softer domestic demand. The increase in exports has been supported by continued industrial upgrading and diversified trade flows. Mechanical and electrical products, which now make up around 60 percent of total exports, led the way. Shipments of automatic data processing equipment and parts, integrated circuits, and automobiles all posted solid growth. According to Chinese officials, these trends are indicative of progress in building what they refer to as “new quality productive forces.” Yet, beneath the surface, there is growing speculation that part of this export growth may be front-loaded, as exporters seek to preempt potential trade friction with the U.S. —particularly in sensitive sectors such as EVs, solar technology, and semiconductors.
This hypothesis is reinforced by a clear shift in China’s trading partners. ASEAN remained China’s largest trading partner, with trade climbing 9.4 percent year-on-year to reach RMB 4.29 trillion, accounting for 16.7 percent of China’s total trade. The EU ranked second at RMB 3.35 trillion, up 3.9 percent, while the U.S. fell to third, with total trade down 11.1 percent to RMB 2.42 trillion. The sharp decline in U.S. trade volumes may be attributed not only to a cooling bilateral relationship but also to re-routing of trade flows through intermediary markets—a pattern seen in previous rounds of tariff escalation.
In the dry bulk segment, iron ore imports softened slightly, with July volumes down 1.3 percent month-on-month to 104.62 million tonnes, following a strong performance in June. The decline was partly driven by higher seaborne prices, which dampened steel mill demand, alongside fewer shipments from miners who had rushed cargoes ahead of quarter-end targets. Weather disruptions, including Typhoon Wipha, also delayed several cargoes. Still, July imports remained above the same period last year. Over the first seven months of 2025, total iron ore imports reached 696.57 million tonnes, a 2.3 percent year-on-year decline. Coal imports continued to underperform, with July volumes down 23 percent year-on-year to 35.61 million tonnes. Although slightly higher than in June—when extreme heat lifted electricity consumption—the broader trend remains negative. Cumulative coal imports for the first seven months fell 13 percent year-on-year to 257.3 million tonnes. The bearish outlook is reinforced by growing domestic production, the rapid expansion of renewable energy, and flagging demand from the steel sector.
In contrast, soybean imports hit another record in July, rising 18.5 percent year-on-year to 11.67 million tonnes, driven by continued strong arrivals from Brazil. This marks the second consecutive month of record soybean imports, following June’s intake of 12.26 million tonnes. Brazil’s extended peak export window, supported by a bumper harvest, has boosted shipments to China, while U.S. exports have remained weak. According to the USDA, China is on track to import 112 million tonnes of soybeans in the 2025–26 marketing year, matching its all-time high. Reuters data shows that by late March, 77 percent of Brazil’s soybean exports—or 17.7 million tonnes—were headed for China. The surge in agricultural imports contrasts with the broader weakness in bulk commodities and reflects the structural demand for feedstock as China’s livestock sector recovers. Meanwhile, steel exports continued to defy expectations, posting yet another monthly increase. July exports rose 1.7 percent month-on-month to 9.84 million tonnes, bringing the year-to-date total to 67.98 million tonnes—the highest level on record going back to 1990. However, this export strength has come at a cost. Nearly 40 countries have launched anti-dumping investigations since early 2024, targeting what they view as unfairly priced Chinese steel.
The export boom witnessed in Japan during the 1980s offers a useful historical lens through which to interpret the recent strength in Chinese trade. Strategic front-loading, driven by fear of future policy constraints, can inflate short-term figures but rarely signals a sustainable trend. For dry bulk markets, separating genuine demand from precautionary shipping activity remains essential in assessing the health of global trade.
Data source: Doric