- Exports rose 19.4% from a year earlier in U.S. dollar value terms, accelerating from the 14.1% gain in April.
- Imports growth momentum continued to build, expanding 27.4% in May, the outpacing from 25.3% in April.
- China's economy has shown signs of faltering following a strong first-quarter.
China's trade growth held up better than expected in May, as surging AI-related exports helped buffer the economy against disruption from the Iran war.
Exports rose 19.4% from a year earlier in U.S. dollar value terms, customs data showed Tuesday, accelerating from the 14.1% gain in April. Economists polled by Reuters had pegged growth at 15%.
Imports growth momentum continued to build, expanding 27.4% in May, the outpacing from 25.3% in April, beating economists' forecast for a 25% growth.
The import surge has largely been driven by higher input costs and narrowly concentrated in select categories, particularly semiconductor chips and gold, and "hardly a sign of rebalancing," according to economists at Bank of America Global Research.
"With weak overall demand and ongoing domestic substitution, genuine trade rebalancing remains distant," BofA economists said, adding that the export boom has reduced Beijing's urgency for meaningful policy stimulus.
China's economy has shown signs of faltering following a strong first-quarter.
Growth slowed across the board in April, with industrial production and retail sales posting their weakest gains in years. In May, the official gauge on manufacturing activity also slowed to 50, the threshold separating expansion from contraction.
Chinese exporters have so far weathered the fallout from the Middle East conflict, with overseas buyers rushing to lock in supplies before energy costs climb further. But economists have warned the tailwind may be short-lived — once overseas stockpiling momentum fades, sluggish domestic consumption will be unable to fill the gap.
"We expect the AI boom to support production and trade," said Xiangrong Yu, chief China economist at Citi Bank, as higher prices for tech and semiconductor goods boost headline growth. "Domestic demand could show continued weakness," Yu added.
Yu anticipates retail sales growth, a gauge on consumption, may fall to zero in May on fading impact from trade-in subsidies, further slowing from the three-year low of
0.2% growth in April.
A persistently weak jobs market has also compounded the pressure on consumer spending. "Despite soaring exports, the number of manufacturing jobs continues to contract," said Frederic Neumann, chief Asia economist at HSBC Bank, as productivity gains from automation reduce demand for workers.
China's economy has developed into what economists called "K-speed" growth paradigm, with booming manufacturing and export sectors contrasting persistent weakness in property markets and consumer spending.
Exports have remained the bright spot for the world's second-largest economy, driven by robust global demand for AI technology and renewable-energy products.
While demand remains weak, rising commodity costs from disruption to energy flows through the Strait of Hormuz have helped to alleviate deflationary pressures that have plagued Chinese economy for years.
Economists expect the country's producer inflation, due Wednesday, to accelerate to 3.8% in May, the strongest level in nearly four years, as manufacturers absorb the higher input costs, according to a Reuters poll. Consumer inflation is expected to rise by a modest 1.3%.
China, holding roughly 15% of global oil stocks before the war broke out, could run through its oil reserves by late October if forced to draw down inventories to cover any supply shortfall, according to Fitch Ratings.
"Though China's stable power supply could provide a buffer, the supply shock as a result of the energy crisis will still inflict pain on China's economy via shortages and higher prices," said Jing Wang, China Economist at Nomura.<small>Source: CNBC</small>
Business
China trade defies Iran war drag as exports, imports beat estimates in May
CNBC
June 09, 2026
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