Key facts
- China's export growth accelerated to 19.4% in May, up from 14.1% in April.
- Imports rose 27.4% in May, exceeding the previous month's 25.3% increase.
- Strong demand for AI-related products, including semiconductors and automated data processing equipment, drove export growth.
- Exports of integrated circuits surged 111% year-on-year.
- China's trade surplus widened to $105.43 billion in May.
- Despite export strength, some sectors like furniture and toy shipments showed slower growth or declines.
China's export growth surged 19.4% in May, significantly exceeding forecasts and providing a much-needed boost to its economy amidst a persistent domestic slowdown. This acceleration was largely propelled by robust global demand for semiconductors, autos, and other high-tech goods fueling the AI boom. Imports also saw a strong rise of 27.4%.
Key drivers included an 111% year-on-year surge in integrated circuit exports and substantial growth in automated data processing equipment and car shipments. This AI-driven demand is playing to China's manufacturing strengths. However, signs of strain are emerging in other sectors, with furniture, toy, and footwear exports showing much weaker performance or declines.
Separate data indicated a steep drop in new export orders last month, suggesting that the recent export momentum may be fading. The strong export performance has widened China's trade surplus to $105.43 billion in May. International pressure is mounting on Beijing to bolster domestic consumption, with concerns raised about China's industrial overcapacity and its potential to distort trade and disadvantage other economies. The OECD noted that subsidies significantly contribute to Chinese firms' market share gains, and a US Federal Reserve paper highlighted China's trade surplus as a percentage of global GDP exceeding historical peaks of Japan and Germany.
Exports to Europe rose 7.6%, while those to the United States climbed 35.4% and Southeast Asia increased 24.3%. Purchases from South Korea, a major chip market for China, surged 83.6%. Meanwhile, crude oil imports plunged 29% in May to an eight-year low, tempering global prices and partially cushioning the energy shock from the Iran conflict. China's rare earth exports, however, rose to a four-month high.