China’s exports and imports expanded at a faster pace in May, exceeding expectations, as strong demand for artificial intelligence (AI) hardware offset disruption from the Iran war.
Exports rose more than 19% year-on-year, the highest in three months, according to a statement released by the General Administration of Customs on Tuesday. This compares with the median estimate of 15% in a Bloomberg survey of economists.
Imports surged more than 27% in May, with the trade surplus at $105.4 billion ($135.7 billion), the largest since January.
Hao Zhou, chief economist at Guotai Junnan International Holdings, said the strong export growth “suggests continued support from AI-related hardware demand and the possibility of bringing forward overseas orders amid geopolitical uncertainty.” “Strong export performance provides a meaningful cushion against the domestic economic downturn.”
Despite the global energy crisis caused by the Middle East conflict, building global AI infrastructure has emerged as a key force driving Asian trade this year. This has led to huge profits for companies such as South Korean giant Samsung Electronics, as well as lesser-known Chinese hardware suppliers such as Nakayoshi Innolight, which makes optical modules essential to data centers.
International shipments of computers and parts rose 66% in May from a year earlier, the fastest pace since 2010 and an acceleration from a 47% increase in the previous month. Overseas integrated circuit sales rose 111%, the most since 2013.
Exports to the U.S. rose about 36%, the most since 2021, continuing a recovery after a long period of double-digit declines amid the tariff war launched by President Donald Trump. Export growth accelerated in most major regions except the European Union and Latin America.
Imports from China are also on the rise as companies load up on foreign chips and equipment. South Korea’s semiconductor exports to China surged more than 200% in May compared to the same month last year.
The AI boom is driving a K-shaped expansion across China’s trade, factory production, and industrial profits. Semiconductors and computers accounted for half of China’s export growth in April, while traditional products such as clothing were flat.
This disconnect complicates China’s economic policy-making, as much of the economy still suffers from weak consumer demand, even as some factories in AI-related sectors are thriving.
With strong exports, Chinese authorities may be taking comfort in the strong renminbi. In contrast to labor-intensive products, exports of high-tech products are less affected by domestic currency appreciation.
China’s export prices rose at the fastest pace in three years in April, reversing nearly uninterrupted contraction in recent years as prices for oil, chips and metals soared. But such price hikes have not yet spread to most Chinese products, suggesting that intense domestic competition still limits the amount factories can charge buyers.
And despite being the world’s largest oil importer, China buys much less crude from abroad, with imported crude oil shipments down 5% in the first five months of 2026 compared to a year ago.
“Despite global economic uncertainty and a strong renminbi this year, China achieved strong export growth,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, using the currency’s official name. “The strong growth in exports shows the competitiveness of Chinese enterprises in the international market.”
sauce: bloomberg
