China's export engine remained firmly driven by demand from artificial intelligence (AI)-related industries and high-end manufacturing goods in May 2026, helping the country post a trade surplus of over USD 105 billion despite growing geopolitical uncertainties, according to an ICICI Bank Research report.

China's exports expanded 19.4 per cent year-on-year in May, surpassing market expectations of 15 per cent and accelerating from 14.1 per cent growth recorded in April. Imports also rose sharply by 27.4 per cent, resulting in the trade surplus widening to USD 105.4 billion from USD 84.8 billion in the previous month.

The report noted that "China's exports continued to benefit from strong overseas demand for goods from AI-related industries and other high-end manufactured goods."

Exports of high-tech products surged 50.9 per cent year-on-year in May, while shipments of mechanical and electrical products, which account for over 60 per cent of China's exports, rose 27.4 per cent. Strong demand from the United States, ASEAN economies and other major markets supported the robust performance.

According to the report, "Mechanical and electrical products (61% of total), and hi-tech goods (25%), maintained their double-digit pace, growing at an even higher pace of 27.4% and 50.9%, respectively."

The import side also reflected sustained momentum in China's technology and infrastructure sectors. Imports of mechanical, electrical and hi-tech products, commonly used as inputs for technology exports, remained strong, while higher imports of base metals suggested continued government-led infrastructure spending.

The report said, "Strength in Chinese imports in mechanical and hi-tech products that are used as inputs for technology exports would suggest that the export outlook remains constructive."

However, the report cautioned that the favourable outlook could face challenges if geopolitical tensions intensify and weigh on global economic growth. The ongoing West Asia conflict remains a key risk factor, particularly for the global AI investment cycle that has been supporting demand for Chinese technology exports.

Highlighting future risks, the report stated, "Going forward, Chinese export outlook remains constructive. However, there are downside risks if the conflict works to derail global growth, and particularly the AI cycle." ICICI Bank Research expects China's imports to remain linked to the momentum in technology exports and public capital expenditure.

Published on June 11, 2026