Key facts
- China's exports are forecast to grow 18.2% year-on-year in June, down from 19.4% in May.
- Imports are expected to rise 24% year-on-year, slowing from 27.4% in May.
- Global AI investment is a key support for China's economy.
- U.S. retailers advanced orders to prepare for potential tariffs.
- China's trade surplus is projected to increase to $120.60 billion in June.
China's export growth is expected to moderate in June, though it is still anticipated to remain robust, driven by demand for AI-related products and preemptive shipments to the United States ahead of potential new tariffs. The world's second-largest economy is forecast to see exports rise 18.2% year-on-year in dollar terms, a slight cooling from May's 19.4% increase, according to a Reuters poll of 20 economists.
Global investment in artificial intelligence is providing a crucial support for China's economy, helping manufacturers navigate disruptions from Middle East conflict and a protracted property downturn. Imports are predicted to grow 24%, down from 27.4% in May, with data suggesting demand is primarily for semiconductors and technology components rather than a broad recovery in domestic consumption.
Separate manufacturing data for June indicated a recovery in overseas demand, although factory-gate prices continued to decline as companies engaged in aggressive price competition to secure business from cost-sensitive international customers facing higher energy costs. Chinese exporters also benefited from U.S. retailers expediting orders by four to six weeks to build inventory for holiday sales before anticipated tariff increases.
Economists hold differing views on the export performance, with BNP Paribas and Mizuho Securities forecasting a 20% rise, while Chinese firms like China Industrial Securities and Shanghai Securities were more conservative, predicting only a 12% increase. Exports played a significant role in China's better-than-expected first-quarter performance, but recent economic momentum has slowed, raising concerns about the economy's reliance on external markets and increasing the likelihood of further policy support.
The country is scheduled to release its second-quarter GDP figures on Wednesday, with the government's annual growth target set between 4.5% and 5%. Trade data for May revealed a notable weakness, with most Chinese exports showing minimal growth apart from semiconductors, while shipments of automated data processing equipment surged 60% during that period. China's trade surplus is projected to widen to $120.60 billion in June, up from $105.43 billion in May.