China's $1.2 Trillion Windfall Reshapes Global Capital Flows

China’s record $1.2 trillion trade surplus is moving out of state coffers into the private sector, fueling a surge in overseas asset holdings and about $535 billion in private purchases of foreign securities. By late 2025, private Chinese investors held more than $1 trillion in foreign assets, signaling a major shift in global capital flows and raising the risk of a sudden reversal if the yuan strengthens or exporters repatriate funds. The private sector’s expanding footprint, aided by banks and FX channels, plus about 30% of trade now settled in yuan, suggests China could become a larger, more influential net creditor on the world stage.