China's export machine revved up in June, with shipments abroad rising 27% from a year earlier, according to customs data released Tuesday. The figure easily beat economists' forecasts and marked an acceleration from May's 19.4% growth, driven largely by the global artificial intelligence boom.
Imports also surged, climbing 36% year-on-year, up from 27.4% in May. Analysts attributed part of the increase to higher import costs linked to the ongoing conflict in the Middle East, which has pushed up energy prices. The trade surplus widened to $125.6 billion from $105.4 billion in May.
“Trade values took another big leg up in June,” Julian Evans-Pritchard, head of China Economics at Capital Economics, wrote in a note. “This predominantly reflects the recent surge in semiconductor prices on the back of the AI boom. But even putting that aside, foreign demand for Chinese goods remains robust.”
The strength in exports has been a crucial counterweight to persistent weakness in domestic consumption and investment, which continue to suffer from a prolonged downturn in the property sector. In the first half of the year, exports climbed 17.6% and imports rose 26.6%.
AI and Autos Lead the Charge
China's shipments of vehicles—especially electric vehicles—and other tech-related products have boomed as rapid AI adoption drives demand for semiconductors and electronic equipment. This trend mirrors the surge seen at Taiwan Semiconductor Manufacturing Company (TSMC), which reported a 68% jump in June sales on AI chip demand.
However, the export boom is not without risks. Wei Li, head of multi-asset investments at BNP Paribas Securities (China), warned that while growth is likely to continue, it is becoming increasingly fragile. “Robust shipments in autos and AI-related items will remain dependent on global demand and regulatory barriers,” he said.
Policymakers in both the United States and Europe have expressed alarm over rising trade deficits with China. In response, Chinese companies have been moving factories to regions like Europe to bypass higher tariffs. The European Union has signaled it may impose unilateral trade measures against China before an October deadline, a move that could reshape supply chains.
Exports to Southeast Asia surged nearly 35% in June from a year earlier, while those to the European Union rose more than 18% and to Latin America over 28%. Shipments to the United States climbed almost 14%, partly due to a low base effect after President Donald Trump reimposed higher tariffs last year.
China is set to release its second-quarter GDP data on Wednesday. The government has set an annual growth target of 4.5% to 5%, slightly below the 5% achieved in 2025. The International Monetary Fund last week raised its 2026 growth forecast for China to 4.6%, but expects expansion to slow to 4.1% by 2027.
The broader geopolitical context adds further uncertainty. The conflict in the Middle East has sent oil prices surging, and the Trump administration's reimposition of a Hormuz blockade has threatened shipping through the Strait of Hormuz. These factors could feed into higher import costs for China and complicate its trade outlook.
For Europe, the implications are twofold: Chinese exports of EVs and electronics continue to flood the EU market, while European policymakers weigh retaliatory tariffs. The debate over national sovereignty versus EU unity, as highlighted by former Italian Prime Minister Enrico Letta, remains central to the bloc's response.
