China's exports surge as demand for high-tech, AI help prop up economic growth

Strong demand for AI products as well as electric vehicles, solar cells and lithium-ion batteries offset the impact from weather events, said Zhaopeng Xing, ANZ's senior China strategist. Xing noted that companies were still rushing to send goods to the U.S. due to tariff uncertainties. "The main areas of import growth still look tied to tech products, showing China continues to spend in the ongoing tech race," ING's Song said. China's push to dominate key technologies has turbocharged investor appetite for tech stocks, while surging AI-related demand is lifting a new generation of manufacturers. Chipmaker CXMT swung to a first-half profit in its maiden earnings report since listing, as soaring memory chip prices and strong demand for AI-driven computing lifted sales. Industries relying on the domestic market, however, have been grappling with producer price inflation and soft demand. Relying on outbound shipments to absorb industrial capacity also exposes China to risks of curbs from trading partners, as the U.S. and the European Union have both demanded Beijing lower its trade surpluses. China's export growth quickened last month, buoyed by strong overseas appetite for high-tech and AI-related products, providing vital support for an economy weighed down by sluggish domestic demand. The divergence between resilient exports and weak activity at home highlights Beijing's continued dependence on foreign demand, with policymakers struggling to revive consumption and investment as they pursue a 4.5%-5% GDP growth target this year. Exports from the world's second-biggest economy surged 25% year-on-year in August in U.S. dollar terms, matching forecasts and accelerating from the 23.9% growth in the previous month, customs data showed on Tuesday. Imports jumped 28.2%, compared with a 27.5% year-on-year increase in July and a forecast for a 30% rise. Lynn Song, ING's Greater China chief economist, said that while external demand had significantly outpaced domestic consumption, "tariff risks and the durability of the tech investment cycle are the key factors to watch to see how long this strength will persist." In the first eight months, exports of high-tech products rose 42.9% in U.S. dollar value terms. Semiconductor export values more than doubled even as volumes edged up just 4.1%, while car exports rose more than 50% in both value and volume. After growth cooled to 4.3% in the April-to-June period, economic data released last month showed industrial output and retail sales both slowed at the start of the third quarter, while fixed-asset investment recorded a sharper decline in the first seven months. The property market, once a major growth driver, is still in a years-long downturn. Premier Li Qiang, the country's No. 2 leader, in August called for efforts to stabilise external demand while acknowledging insufficient domestic demand, hardships facing industries as well as rising uncertainties in the international environment. The government has stepped up fiscal support for the economy, including deploying an 800 billion yuan ($119.21 billion) financing tool to shore up infrastructure investment. But the strength in exports relieves Beijing of immediate large-scale actions to boost household income, improve job security and revive the property market. "The latest trade data do not materially strengthen the case for an imminent interest rate cut," said Hao Zhou, a Hong Kong-based analyst at Guotai Haitong Securities. "While further policy support cannot be ruled out, the combination of resilient external demand, steady industrial momentum, and increasingly targeted fiscal measures implies that the timing and necessity of additional monetary easing will require further observation." ($1 = 6.7108 Chinese yuan renminbi) China's trade surplus rose to $119.09 billion in August, from $112.5 billion the previous month. The surplus in the first eight months reached $805.51 billion, putting the annual number on track to top $1 trillion for the second year. The trade surplus with the U.S. rose to $29.18 billion from $28 billion in July, with China's exports to the U.S. jumping 34.4% year-on-year, outstripping the 17.8% growth in imports. A trade truce between Beijing and Washington, reached late last year when the two countries’ presidents met, has held despite on-and-off frictions. The two governments are now exploring reciprocal tariff cuts on $30 billion worth of goods from each side as they prepare for another summit later this month. China's exports of rare earths in August rose month-on-month in volume, but held well below the year-to-date monthly average. Crude oil imports, meanwhile, dropped 23.4% year-on-year in volume terms. The trade data barely moved markets, leaving the yuan flat and stocks slightly higher as traders awaited U.S. inflation data for fresh signals on the Federal Reserve's rate path.

China's exports surge as demand for high-tech, AI help prop up economic growth

AI demand and trade tensions shape the outlook

China's exports and imports accelerate in August

Domestic weakness keeps pressure on policymakers

Trade surplus widens as external demand supports growth

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