China's exports rose for a second consecutive month in May, surging on demand for artificial intelligence (AI).
China's exports increased 19.4% year-on-year in May, far exceeding Bloomberg's market estimate of 15%, according to the General Administration of Customs, the country's customs authority, on Monday. China's export growth had slowed to 2.5% in March, just after the outbreak of the Iran war, before climbing to 14.1% in April and then jumping to 19.4% this month.
Imports also rose. May imports increased 27.4% over the same period, surpassing both the estimate of 26% and the April figure of 25.3%. The trade surplus reached $105.43 billion, the largest since January.
Analysts say demand for AI hardware drove China's strong exports and imports. Lynn Song, chief China economist at ING, told the Financial Times (FT) that "there is strong vitality in the usual technology-related sectors," citing a 110% increase in semiconductor exports, a 44% rise in mobile phone shipments, and a 66% surge in computer and components exports. The growth in computer and components exports in particular marked the highest level in 16 years, since 2010.
Zhou Hao, chief economist at Guotai Junan International Holdings, told BloombergNEF that "the strong export growth shows that demand for AI-related hardware continues to provide support, and there is also a possibility that some overseas orders were brought forward amid geopolitical uncertainty." Such export performance is having a buffering effect against China's domestic economic slowdown.
Beyond major IT companies such as Samsung Electronics, relatively lesser-known hardware suppliers such as China's Zhongji Innolight, which produces optical modules essential for data centers, are also benefiting, according to BloombergNEF.
The US-China trade war, which came to an end last October, was also cited as a cause of the export growth. China's exports to the US in May jumped 35% from a year earlier, while imports also rose 20%. Another notable point is that imports from Korea hit a record high. Imports from Korea surged 84% year-on-year to $26.7 billion, accounting for about 9.8% of China's total imports and surpassing Taiwan (8.5%), the EU (8.3%), and the US (4.8%). Analysts say Korean semiconductor demand for strengthening AI infrastructure is growing in China as well.
