China's June exports surge 27% year-on-year as AI boom drives demand
China's exports rose 27% in June from a year earlier, beating expectations, while imports jumped 36%. The surge is largely fueled by semiconductor demand from the AI boom, with strong trade to Southeast Asia, the EU, and Latin America.
China’s exports surged 27% year-on-year in June, far exceeding economist forecasts. This compares to a 19.4% increase in May. Imports also accelerated, rising 36% year-on-year, up from 27.4% in May. Analysts attribute part of the import growth to higher costs related to the Iran war.
The trade surplus widened to $125.6 billion in June from $105.4 billion in May. Julian Evans-Pritchard, head of China Economics at Capital Economics, noted that trade values took another big leg up, primarily driven by a surge in semiconductor prices due to the AI boom. However, even excluding that, foreign demand for Chinese goods remains robust.
Vehicle exports, especially electric vehicles, and other tech-related products have boomed as rapid AI adoption increases the need for semiconductors and electronics. Strong export manufacturing has helped offset persistent weakness in domestic spending and investment linked to a prolonged property downturn. In the first half of 2026, exports climbed 17.6% and imports jumped 26.6%.
Policymakers in the US and Europe have expressed alarm over growing trade deficits with China. To bypass barriers such as higher tariffs, Chinese firms have been relocating factories to Europe and increasing exports to Southeast Asia, Latin America, and Africa. June exports to Southeast Asia surged nearly 35%, to the EU over 18%, and to Latin America 28%. Exports to the US rose almost 14%, partly due to a low base effect after President Donald Trump reimposed higher tariffs last year.
According to Wei Li, Head of Multi-Asset Investments at BNP Paribas Securities (China), while export growth is likely to continue, it is becoming increasingly fragile, dependent on global demand and regulatory barriers for autos and AI-related items. China will release its Q2 GDP data on Wednesday. The government targets annual growth of 4.5%-5%, while the IMF recently raised its 2026 forecast to 4.6% but expects a slowdown to 4.1% in 2027. Despite trade-in subsidies for cars and appliances, many Chinese consumers remain cautious due to economic pressures.
