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China’s exports and imports rose sharply in July, extending the country’s trade boom as strong global demand for artificial intelligence boosted overseas shipments.
The world’s second-largest economy recorded a historic trade surplus of nearly $1.2 trillion last year. The trade surplus has supported China’s manufacturing sector amid a prolonged slowdown in domestic consumption.
The export surge has been driven by rising demand for Chinese data-processing equipment and related components as companies expand their artificial intelligence capabilities.
Exports rose 23.9 percent year-on-year in July, according to data released by the General Administration of Customs (GAC) on Friday. The increase was above Bloomberg’s 23.0 percent forecast.
Exports of computers and related parts rose 45.2 percent year-on-year in the first seven months of the year.
“Export and import values remain elevated, helped by soaring global demand for electronics and green tech products,” Julian Evans-Pritchard of Capital Economics wrote.
China’s trade surplus reached $687 billion through the end of July, putting it on track to match last year’s level.
China’s widening trade surplus has raised concerns overseas, particularly in Europe, where governments fear a surge in Chinese exports could put further pressure on local manufacturers.
Beijing has said it has never deliberately pursued a trade surplus.
The Communist Party’s Politburo, headed by President Xi Jinping, called for more “balanced” trade development at a key meeting late last month.
“Export growth continued to support the economy in July,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note after the data.
“I expect intense negotiations between China and (its) major trading partners in coming months on what can be done to make trade more balanced,” he added.
China’s imports increased 27.5 percent in July, continuing their strong performance this year despite weak domestic demand.
The growth was slower than the 36 percent increase recorded in June and below Bloomberg’s forecast of 29.5 percent.
China’s trade growth comes as the global trading system faces pressure from the war in the Middle East and continuing trade tensions between Beijing and Washington.
Chinese shipments to the United States rose 17 percent year-on-year in July. China’s trade surplus with the US reached nearly $171 billion through the end of July.
Also Read: China’s Trade Surges as AI Boom Fuels 27% Export Jump and 36% Import Spike
Trade tensions between Beijing and Washington have intensified again. After Washington imposed sanctions over forced labour and national security concerns, Beijing announced restrictions on drone exports to the US on Wednesday and blacklisted six firms.
China and the US spent much of last year in an escalating trade war before reaching a truce after US President Donald Trump met Xi in October.
The relationship will face further scrutiny in the coming weeks as officials prepare for Xi’s scheduled state visit to the United States in late September.
