In June, China experienced a notable surge in exports, climbing 27% compared to the previous year, driven in part by the burgeoning artificial intelligence sector, as reported by the customs agency on Tuesday. This growth significantly exceeded economists' predictions, with May's export rise recorded at 19.4%.
Imports also saw a remarkable increase of 36% in June, an improvement from the 27.4% growth observed in May. Analysts linked this spike to heightened import costs, sparked by the ongoing conflict in Iran.
The nation's trade surplus expanded to $125.6 billion in June, up from $105.4 billion in the prior month. Wang Jun, vice minister of China’s General Administration of Customs, noted during a press conference in Beijing that the rapid advancement of AI has contributed to a robust trade in related products. The trade in electronic components, computer parts, and hardware skyrocketed nearly 57%, reaching 5.1 trillion yuan (approximately $760 billion) in the first half of the year. Innovative products such as AI-enhanced eyewear and translation devices are also experiencing growth.
Julian Evans-Pritchard, head of China Economics at Capital Economics, remarked on the substantial trade value increase in June, attributing it largely to the recent rise in semiconductor prices fueled by the AI boom. He emphasized that foreign demand for Chinese goods remains strong, even when excluding the semiconductor surge.
China's exports of electric vehicles (EVs) and technology-related items have surged, largely due to the heightened demand for semiconductors and electronic devices resulting from the rapid adoption of AI. This robust export manufacturing sector has been critical in balancing ongoing weaknesses in domestic spending and investment, especially amid a prolonged downturn in the real estate market.
Between January and June, China's exports increased by 17.6% year-on-year, while imports jumped by 26.6%, according to customs data. Policymakers in the United States and Europe have expressed concerns regarding rising trade deficits with China. In response to increased tariffs, Chinese companies have been relocating factories to regions like Europe and boosting exports to Southeast Asia, Latin America, and Africa.
Wang acknowledged the mounting risks posed by rising trade barriers, stating, “We still face serious risks and challenges in the second half of the year.”
While the outlook for China's export growth remains positive, experts warn that it is becoming increasingly precarious. Wei Li, head of Multi-Asset Investments at BNP Paribas Securities (China), emphasized that the strong shipments in the automotive and AI sectors will depend heavily on global market demand and regulatory factors.
In June, exports to Southeast Asia surged nearly 35% from the previous year, while those to the European Union and Latin America rose by more than 18% and 28%, respectively. Exports to the United States increased by nearly 14%, a recovery from declines seen last year following the reimplementation of higher tariffs during President Donald Trump's administration.
China is expected to release its economic growth figures for the April to June quarter on Wednesday. The country has set an annual growth target of 4.5% to 5% for this year, slightly below the 5% growth aimed for in 2025. Last week, the International Monetary Fund slightly raised China's growth forecast by 0.2 percentage points to 4.6%, though it anticipates economic expansion will slow to 4.1% by 2027.
To encourage consumer spending, Chinese authorities have initiated various measures, including incentives for trading in vehicles and home appliances. However, many Chinese consumers are currently feeling the effects of a slowing economy and are wary of making large purchases.
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With contributions from AP Videographer Borg Wong in Beijing.
