China’s trade growth surged amid strong external demand
Per the full note source, China's July trade data showed exports surging 23.9% year-on-year, driven by strong external demand across ships, autos, and tech, with the trade surplus widening to USD 112.5bn. The desk highlights a continued shift toward higher value-added exports, with semiconductor exports up 116.6% and ship exports rising 92.4%. While the print was broadly in line with expectations, ING's own forecast was higher at 28.1%, suggesting some downside surprise. The US remains a key destination with a fourth straight month of double-digit growth, but escalating tech-related trade frictions pose a risk ahead of President Xi's US visit on 24 September. This calendar event will be crucial in determining whether export momentum persists into Q4, with implications for USD/CNY and broader Asian FX.
What the desk is arguing
The desk argues that China's July trade surplus surged to USD 112.5bn, well above expectations, as exports rose 23.9% year-on-year, driven by strong external demand across sectors including ships, autos, and tech. This reinforces the narrative of a resilient Chinese export sector despite ongoing trade tensions.
The product breakdown shows a clear shift toward higher value-added exports, with semiconductor exports up 116.6% year-on-year, ship exports surging 92.4%, and auto exports still strong at 60.4%. By destination, exports to the US rose 17.0% in July, marking the fourth straight month of double-digit growth.
The alternative read would be that this strength is driven by front-loading ahead of potential tariffs or trade restrictions, and the recent US-China scuffles over tech imports and export controls could derail the momentum. The desk, however, sees the trade truce as fragile but holding ahead of President Xi's visit.
Key takeaways
- 01China's July exports rose 23.9% YoY, broadly in line with expectations, while the trade surplus hit USD 112.5bn.
- 02Semiconductor exports saw triple-digit growth of 116.6% YoY, and ship exports surged 92.4%.
- 03Exports to the US grew 17.0% YoY, but trade frictions persist, with new US bans and Chinese countermeasures.
- 04The upcoming Xi-Trump meeting on 24 September is a key catalyst for whether trade momentum continues into Q4.
Market implications
Watch USD/CNY for any reaction to trade headlines, with the 7.00 level as a psychological barrier. A breakdown in trade talks could see USD/CNY test 7.15, while continued strength in exports may keep the yuan supported around 6.95.
Risks to this view
The call is invalidated if US-China trade tensions escalate further, for instance if the US expands entity lists or China retaliates with new export controls. Additionally, a sharp slowdown in global demand, as signaled by weakening PMIs in major economies, would hit export volumes and the trade surplus.
Older quick take Quick take Published 05:03 China China’s trade growth surged amid strong external demand Chinese exports surged in July as external demand remained strong for sectors from ships to autos to tech. Imports continue to be driven by tech, while coal and natural gas imports picked up in July as oil imports remained in contraction Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Lynn Song Chief Economist, Greater China USD 112.5bn China's July trade surplus Higher than expected Exports saw another strong month in July China’s exports rose 23.9% year-on-year in July, edging down from 27.0% YoY, and coming in broadly in line with expectations (market: 23.0%, ING: 28.1%). In the first seven months of the year, exports rose 18.5% YoY to $2.52tn.
The product breakdown of China's exports continued to show the shift toward higher value-added exports. In July, semiconductor exports saw another month of triple-digit growth at 116.6% YoY, ship exports surged to 92.4%, auto exports slowed slightly to 60.4%, and hi-tech exports were stable at 52.7%. By export destination, we saw the fourth straight month of double-digit YoY export growth to the US, which rose 17.0% in July to bring the full-year export growth to 2.6% YoY.
We’ve seen some further scuffles between China and the US over the past month, particularly in tech-related categories. The US banned imports of certain robotics products and power inverters from China. It added 43 Chinese companies to the Uyghur Forced Labor Prevention Act, leading to retaliation from China in the form of export controls on drones to the US.
China also added 6 US entities to countermeasure lists. For now, the fragile trade truce remains in place ahead of President Xi's visit to the US on 24 September. This meeting could go a long way to deciding whether this recovery will persist into the fourth quarter.
China's fastest-export-growth destinations in July included Mexico (48.8%), Korea (46.6%), ASEAN (38.4%), and Russia (34.9%), while exports to the EU (16.0%) and Japan (14.0%), though solid, grew at a more moderate pace. Exports to the US continued to recover despite renewed tensions Imports continued to be tech driven Imports remained strong at 27.5% YoY, though this was down from June's 36.0% and also weaker than expectations (market: 29.7%, ING: 33.6%). Through the first seven months of the year, imports rose 26.7% YoY to $1.84tn.
China’s import breakdown shows that oil has become a key focal point for markets, with traders watching crude inflows especially closely. July's data showed that oil imports remained in contraction, but the drop was shallower than in June. Oil import volumes were down -24.3% YoY, up from June's -41.3% to reach a 3-month high, while oil import value was down -4.6%.
Oil imports are still significantly lower than the pre-war normal. Instead, we're seeing imports shift to alternatives. Coal and lignite (83.8%) as well as natural gas (20.2%) both saw strong import growth in July.
However, the main area of growth for China's imports is clearly in the hi-tech categories. Hi-tech imports rose 58.8% YoY, with ADP machine imports surging 198.8% in July. China's import breakdown by product for 1H26 Trade surplus is now positive for 2026 Both export and import growth came in a bit slower than we were looking for.
But the end result was almost exactly in line with our forecasts, with China's trade surplus coming in at $112.5bn (market: $107.1bn, ING: $112.6bn). Through the first seven months of the year, the trade surplus is now at $687.4bn, up 1.0% YoY. This marks the first time since February that we've seen the year-to-date trade surplus in positive YoY growth.
External demand has become increasingly important this year for the growth outlook as China's K-shaped divergence widens . It has thus far been one of the main bright spots this year, also helping to support industrial activity. Incremental easing after July's Politburo meeting might help support domestic demand in the second half, but external demand will likely remain the main driving force this year.
Trade surplus has returned to positive year-on-year growth Trade volume Imports Exports China Asia Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Older quick take
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