East Asia

China’s June trade tops forecasts buoyed by AI boom

Read a summary of this article on FAST.

Get bite-sized news via a new
cards interface. Give it a try.

Click here to return to FAST
Tap here to return to FAST

BEIJING: China’s exports surged in June, buoyed by demand for chips and data centre computing power to fuel the global AI boom, giving policymakers grappling with how to boost domestic demand in the world’s second-largest economy a much-needed buffer.

The stronger-than-expected trade performance shows Chinese manufacturers continued to sustain sales despite slowing growth in major economies and uncertainty over trade relations with Washington. Strong demand for AI-related technology products, front-loading of US-bound shipments and aggressive pricing by Chinese exporters helped support overseas sales.

Exports climbed 27 per cent from a year earlier in US dollar value terms, customs data showed on Tuesday (Jul 14), their best performance in four months, outpacing the 19.4 per cent gain in May and an 18.2 per cent rise forecast by economists.

Imports jumped 36 per cent, compared with a 27.4 per cent gain a month prior, a 5-year high. Economists had forecast growth of 24 per cent for June.

Show More

Show Less

“Continued export strength, mostly driven by AI, points to a better second half, coupled with a more expansionary policy mix, accelerated fiscal spending and mild monetary easing, as well as a de-escalation of the situation in the Middle East, which will benefit China through lower oil prices,” said Xu Tianchen, a senior economist at the Economist Intelligence Unit in Beijing.

“But domestic demand remains a drag. Retail sales remain pretty flat and fixed asset investment was negative last month.”

Global AI investment is providing an important cushion for manufacturers in China’s US$20 trillion economy, even as disruption from the Middle East conflict and a prolonged property slump continue to weigh on broader growth.

Separate manufacturing activity data for June, released late last month, showed overseas demand was beginning to recover, but factory-gate prices continued to fall as companies cut prices to win business from customers squeezed by higher energy costs linked to the Iran conflict.

Global demand for computing data centres and terminal equipment continued to expand, China’s customs vice minister Wang Jun said ahead of the data release.

Imports from South Korea, a major chip manufacturer, rose 85 per cent from a year earlier last month, the data showed, with purchases from Taiwan, another big semiconductor manufacturer, up 41.1 per cent over the same period.

Chinese exporters got a boost as US retailers brought forward orders by four to six weeks to stock up for Black Friday and Christmas sales ahead of expected tariff hikes later this year. Uncertainty remains high, however, after US President Donald Trump’s May visit to Beijing failed to deliver the breakthroughs many had hoped for.

Strong exports helped propel the economy past expectations in the first quarter, but momentum has since cooled, reinforcing economists’ concerns that weak domestic demand leaves China exposed if external conditions soften, raising the prospect of further policy support.

China will publish its GDP figure for the second quarter on Wednesday.

China’s trade surplus came in at US$125.6 billion in June, up from US$105.4 billion a month prior.

Source: Reuters/fh

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Get bite-sized news via a new
cards interface. Give it a try.

Click here to return to FAST
Tap here to return to FAST

About The Author

admin

See author's posts