China's July exports surge 23.9% on AI demand, tariff front-loading

China's export engine continued to power the economy in July, with shipments rising 23.9% year-on-year in dollar terms, according to customs data released on Friday. The figure, while easing from June's 27% surge, comfortably beat the 22.2% forecast in a poll of economists.

Imports grew 27.5% from a year earlier, slowing from June's 36% jump and broadly in line with expectations. The trade surplus narrowed to $112.5 billion from $125.62 billion in June.

The standout driver was high-tech goods. Semiconductor exports nearly doubled in value in the first seven months, while overall high-tech product exports expanded 40.7%. This reflects a widening gap between advanced manufacturers riding the global AI infrastructure boom and traditional industries struggling with weak demand — ceramic shipments fell 28.3% and toy exports dropped 9.7%.

"External demand has become increasingly important this year for the growth outlook as China's K-shaped divergence widens," said Lynn Song, chief Greater China economist at ING.

Exporters also rushed shipments ahead of expected US tariff hikes. A new 12.5% US tariff on Chinese imports took effect in July after a temporary 10% levy expired, part of a broader campaign targeting trading partners. Exports to the US rose 17% year-on-year, while shipments to the European Union gained 16%. Trade with South Korea was notably strong, with exports up 46.6% and imports surging 97.8% on high-tech demand.

Car exports rose more than 50% in both value and volume, driven by aggressive overseas expansion by Chinese automakers.

The robust trade performance may reduce pressure on policymakers to boost domestic consumption, which remains weak. China's economy grew 4.7% in the first half, slowing to 4.3% in the second quarter, as manufacturing and exports offset soft consumer spending and an investment downturn.

Analysts at Macquarie said Beijing's support for consumption and property would likely stay restrained while exports help meet the annual growth target of 4.5-5%.