China's growth in exports and imports topped all forecasts in June, as surging chip prices and global demand for hardware needed to power AI data centers lift trade across Asia.
Exports climbed 27% from a year earlier - the most in four months - according to data released by the General Administration of Customs on Tuesday. That's better than the 19% gain projected by economists surveyed by Bloomberg.
Imports surged at the fastest clip in five years and rose 36%, leaving a trade surplus of $125.6 billion - the second-biggest ever.
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"Rising global demand for AI infrastructure, advanced electronics, and capital equipment remains a key support for Chinese manufacturing exports," said Hao Zhou, chief economist at Guotai Junan International Holdings. "With external demand holding up better than expected, policymakers face less urgency to launch aggressive stimulus."
The race to build out artificial intelligence infrastructure has touched off a new boom cycle for exporters by creating a historic shortage for semiconductors and other electronics. Chip prices have soared as much as 700% over the past year, turbocharging trade from South Korea to Taiwan.
The offshore yuan was little changed after the data and the yield on 10-year government bonds remained steady at 1.74%. While the Chinese currency has outperformed its Asian peers this year, it's perceived as being undervalued by many foreign economists and officials.
Rising trade barriers, global inflationary pressure and geopolitical conflicts present challenges to Chinese trade in the second half, Wang Jun, deputy chief of the customs authority, said at a briefing in Beijing. China is confident it can protect the momentum of foreign trade despite volatility abroad, he said.
The AI frenzy has helped shield China from months of war in the Middle East, even as domestic frailty likely meant economic growth slowed near the lower bound of the official target of 4.5% to 5% in the second quarter.
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But the AI-led export rush is making the economy more unbalanced and vulnerable to any setback in global demand. In China, the technology is also adding further stress to an already fragile labor market.
Worries over the sustainability of the boom already prompted repeated selloffs in South Korean stocks recently, with chip giant SK Hynix Inc.'s share price plunging by a record 15% on Monday. South Korea's exports to China climbed 92% in June from a year ago, their fastest pace since 2010.
And as tensions spiral anew over Iran, investors and economists were also watching for changes to China's oil imports.
Crude oil imports plunged 41% from a year ago to 29 million tons in June - the smallest volume purchased by China in almost a decade.
The country has begun to play an increasingly vital role in balancing the global oil market, and has significantly reduced foreign purchases in recent months after the war began. Analysts expect crude imports to recover as authorities return to strategic stockpiling later this year.
"The global AI supercycle will continue to support the overall regional and Chinese trade performance," said Samuel Tse, senior economist at DBS Bank Hong Kong Ltd. "And easing trade tension with the US also helps with the exports momentum."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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