China's June trade posts strongest growth since 2021 as tech exports surge

China's external trade expanded at its fastest pace since the pandemic-driven boom of 2021 in June, with exports and imports significantly exceeding market expectations, underlining the resilience of the country's manufacturing sector and the growing importance of high-technology products in driving economic growth. However, weak crude oil imports continued to reflect subdued domestic demand and the delayed impact of lower global oil prices.

Official trade data showed that China's exports rose 27 percent year-on-year in June, the strongest growth in 53 months, accelerating from 19.4 percent in May and comfortably surpassing market expectations of around 19 percent. Imports also surprised on the upside, climbing 36 percent year-on-year, the highest growth in five years, compared with 27.4 percent in the previous month.



Record trade surplus
The robust performance pushed China's trade surplus to US$ 125.62 billion in June, the highest level since January 2025 and above analysts' expectations. During the first half of 2026, exports increased 17.6 percent year-on-year to US$ 1.55 trillion, reaffirming external demand as one of the strongest pillars of China's economic expansion amid continued weakness in domestic investment and consumer spending.

The surge in exports was led by the mechanical and electrical products segment, which expanded 34.2 percent year-on-year in June. Within this category, semiconductor exports soared 121.9 percent, automobile exports jumped 69.6 percent, while ship exports increased 42.3 percent, highlighting China's growing competitiveness in advanced manufacturing industries.

Overall, high-technology exports climbed 52.2 percent in June, taking first-half growth in the category to 38.5 percent. Semiconductors emerged as the fastest-growing export segment during the January-June period with a remarkable 96.1 percent increase, followed by rare earth products, automobile exports and ships. In contrast, traditional export sectors continued to lag, with exports of toys, footwear and steel declining from a year earlier.

Varying outbound shipment
Export performance also varied across major trading partners. Shipments to ASEAN nations accelerated 34.5 percent, while exports to South Korea and the European Union grew 42.6 percent and 18.5 percent, respectively. Exports to the United States slowed to 13.9 percent growth in June, while shipments to Japan also moderated. Nevertheless, cumulative exports to the United States returned to positive territory during the first half of the year, registering a modest 0.2 percent increase after prolonged weakness.

Trade with technology-intensive economies remained particularly robust. Exports to Taiwan and South Korea recorded some of the fastest growth rates during the first half of the year, largely reflecting strong global demand for semiconductors and electronics. Strong export growth was also reported for ASEAN, Africa, Russia and the European Union, underscoring China's success in diversifying its overseas markets.

Imports surge too
Imports also recorded exceptional growth, reaching their strongest level since June 2021. Similar to exports, the expansion was driven primarily by imports of machinery and high-technology products. Imports of mechanical and electrical products rose 47.5 percent, supported by a 156.7 percent surge in imports of automatic data processing machines and components and a 72.3 percent increase in semiconductor imports. High-tech imports climbed 57.8 percent to a record US$ 106.7 billion, while coal imports also rose sharply by 60.7 percent.

Despite the broad-based strength in imports, crude oil remained a notable exception. China's crude oil imports fell 7.5 percent year-on-year in value terms and 41.3 percent in volume terms during June. At 29.3 million barrels, crude imports were the lowest monthly volume recorded since 2016, indicating that any recovery in oil purchases following the recent correction in global crude prices has yet to materialize in official trade data.

Oil import slows
The weak oil import figures suggest that refiners have remained cautious despite lower international crude prices and improving supply conditions. Although market reports indicate that Chinese buyers have resumed purchases in recent weeks, the time lag between placing orders and cargo arrivals means the recovery may only become visible in the coming months.

The composition of imports also highlights the uneven nature of China's economic recovery. Technology-related imports continued to dominate, while imports of many consumer and industrial commodities remained subdued, reflecting persistent weakness in domestic demand. This divergence is expected to become more evident when China releases its broader economic activity indicators, including industrial production and retail sales, later this month.

Q2 GDP growth to remain up
Economists believe the stronger-than-expected trade performance will provide an important boost to China's second-quarter economic growth. Although the trade surplus during the first half of 2026 declined 1.3 percent in US dollar terms compared with the same period last year due to faster import growth, net exports are still expected to make a positive contribution to GDP after statistical adjustments.

External demand has become an increasingly important engine of China's economy over the past few years, offsetting softness in domestic consumption and private investment. Strong export growth has also supported industrial production, helping manufacturers maintain capacity utilization despite a challenging domestic environment.

Headwinds
However, analysts caution that external risks remain elevated. Among the key concerns are the proposed US sanctions legislation targeting buyers of Russian oil and gas, which could impose secondary tariffs of up to 500 percent, and the possibility of additional tariff measures from the European Union. Either development could disrupt China's export momentum during the second half of the year.

For now, however, China's trade sector continues to outperform expectations, with booming high-technology exports and resilient industrial competitiveness providing a solid foundation for economic growth even as domestic demand and commodity imports, particularly crude oil, remain under pressure.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com