China’s export sector experienced a notable acceleration in June, with a 27% year-on-year increase that significantly surpassed economist expectations. This robust performance is largely attributed to the burgeoning demand generated by the artificial intelligence boom, according to data released by the customs agency.
AI Boom Propels Export Growth
The June export figures represent a substantial uptick from May’s 19.4% year-on-year growth. Imports also showed strong momentum, surging 36% in June, a considerable increase from May’s 27.4% growth. Analysts suggest that rising import costs, partly influenced by the ongoing conflict in Iran, contributed to this expansion. China recorded a trade surplus of $125.6 billion in June, widening from $105.4 billion in the preceding month.
Wang Jun, vice minister of China’s General Administration of Customs, highlighted the direct impact of the AI sector during a news conference in Beijing. “With the rapid growth of AI, our imports and export of products in this field are robust,” Wang stated. He further detailed that trade in electronic components, computer spare parts, and other computing hardware experienced a nearly 57% increase in the first half of the year, reaching 5.1 trillion yuan ($760 billion). The development of AI-specific products such as AI glasses, AI translating devices, and powered exoskeletons is also contributing to this trade dynamism.
Semiconductor Prices and Foreign Demand Key Drivers
Julian Evans-Pritchard, head of China Economics at Capital Economics, commented on the June trade figures, noting that “Trade values took another big leg up in June.” He elaborated that this surge is “predominantly reflects the recent surge in semiconductor prices on the back of the AI boom.” However, Evans-Pritchard also emphasized that “even putting that aside, foreign demand for Chinese goods remains robust.”
The strong performance of China’s export manufacturing, particularly in vehicles, including electric vehicles (EVs), and other technology-related products, is a direct consequence of the rapid adoption of AI. This increased demand for semiconductors and other essential electronic equipment is bolstering export figures.
Domestic Weakness Offset by Export Strength
The vitality in the export sector is playing a crucial role in counterbalancing the prolonged weakness observed in domestic spending and investment. This domestic slowdown is largely attributed to the ongoing downturn in the property industry. For the period of January-June, China’s exports climbed 17.6% year-on-year, while imports saw a more significant jump of 26.6%, according to customs data.
Global Trade Dynamics and Future Challenges
The growing trade surpluses with China have raised concerns among policymakers in the United States and Europe. In response to trade barriers, including higher tariffs, Chinese businesses have been strategically relocating manufacturing facilities to regions such as Europe. Furthermore, China has been increasing its export volumes to Southeast Asia, Latin America, and Africa.
Wang, the customs official, acknowledged the persistent threat posed by rising trade barriers, stating, “We still face serious risks and challenges in the second half of the year.” Wei Li, head of Multi-Asset Investments at BNP Paribas Securities (China), expressed a similar sentiment, suggesting that while China’s export growth is likely to continue, it is becoming increasingly fragile. The robustness of shipments in autos and AI-related items will remain susceptible to fluctuations in global demand and evolving regulatory landscapes.
Geographically, China’s exports to Southeast Asia in June saw a substantial increase of nearly 35% from the previous year. Exports to the European Union and Latin America rose by over 18% and 28%, respectively. Shipments to the United States also climbed, increasing by almost 14% year-on-year. This recent rise in exports to the U.S. follows a period of decline a year earlier, partly influenced by the implementation of higher tariffs.
China is scheduled to release its economic growth data for the April-June quarter. The government has set an annual growth target of 4.5% to 5% for the current year, a slight moderation from the 5% growth recorded in 2025. The International Monetary Fund recently revised its forecast for China’s annual growth upwards by 0.2 percentage points to 4.6%, though it projects a more modest expansion of 4.1% in 2027. Despite various government initiatives aimed at stimulating consumer spending, such as trade-in subsidies for automobiles and home appliances, many consumers are exercising caution due to the economic slowdown.
