China’s trade surplus grew more than expected in May, aided chiefly by outsized growth in exports as overseas demand remained robust despite growing disruptions from the Middle East conflict.
Chinese imports also rose sharply in May, aided in part by increased local demand for semiconductors and artificial intelligence infrastructure.
China’s trade balance grew to a surplus of $105.43 billion in May, customs data showed on Tuesday. The print was higher than expectations for a surplus of $88.70 billion, and rose sharply from April’s reading of $84.80 billion.
An outsized jump in exports was the main driver of the jump, with exports rising 19.4% year-on-year against expectations for a 15% increase. The sharp increase was also in part spurred by a weak print last year, when the U.S.-China trade war was in play.
Overseas buyers were also seen pre-empting orders in the face of heightened economic and energy market uncertainty tied to the Gulf war.
But this front-loading could spur an eventual downturn in Chinese exports, especially if the Gulf war runs longer than expected. The conflict showed few signs of easing as it entered its fourth straight month, despite repeated claims from U.S. officials that a conclusion was close.
Local demand remained robust, especially as China continued to further its artificial intelligence and chipmaking capabilities. Chinese imports grew 27.4% in May, more than expectations for a 25% increase.
The increase in imports was broadly expected after South Korea– which is a key exporter of semiconductors and other AI-linked goods to China– saw a sharp increase in its May exports.
Tuesday’s data showed the Chinese economy sticking largely to its export-driven playbook– a trend that has so far helped the country weather a sustained decline in local consumption and spending.