China's exports surged by 23.9%: AI chips have become the new engine of the economy
China's exports in July posted an impressive 23.9% year-on-year growth, significantly exceeding analysts' consensus forecasts. The key driver of this surge was booming global demand for semiconductors and high-tech products, especially against the backdrop of active infrastructure construction for artificial intelligence (AI) systems.
Such strong momentum allows the world's second-largest economy to confidently weather the storm amid ongoing trade turbulence. However, behind these figures lies a curious paradox: export factories are operating at full capacity, while domestic consumption in the country remains sluggish, pointing to a growing imbalance in the economic model.
Technological renaissance as the foundation of growth
The July figure of 23.9% came in above both the 22.2% forecast expected by my fellow economists surveyed and the median estimate of 23%. Importantly, despite the impressive number, the pace of growth still slowed compared to June's peak of 27%, which was the highest since October 2021.
Imports also showed solid momentum, adding 27.5% for the month. China's trade surplus reached $112.5 billion, surpassing market expectations of $107 billion, although it fell short of June's level of $125.6 billion.
The main contribution to this success came precisely from semiconductors. China's exports of integrated circuits nearly doubled over the past seven months, with chip shipments in July soaring 117% year-on-year. Mechanical and electrical products accounted for more than 60% of total exports during the period. Particularly notable are shipments of electric vehicles, lithium batteries, and wind power equipment. Additionally, there is rapid growth in demand for industrial robots and 3D printers.
The price factor and hidden risks
However, one should not be fooled: export growth is driven not only by an increase in physical shipment volumes. Prices also played a significant role. Certain items rose in price by up to 700% due to acute shortages of chips and electronics. Rising oil prices and a surge in precious metals prices further inflated the monetary value of trade, although real volumes grew much more slowly.
External indicators mask internal problems. China's economy grew by only 4.3% in the second quarter — the weakest pace since late 2022. Retail sales in June added just 1%, and consumer demand remains depressed.
My analysis: China is clearly betting on technological exports as the main locomotive of growth, and so far this strategy is bearing fruit. However, for the crypto industry and global markets, this is a double signal: on the one hand, the strengthening of the semiconductor sector reduces risks of supply disruptions for mining equipment; on the other hand, the persistent imbalance between external and domestic demand could lead to new currency and trade fluctuations, which always have a painful impact on risk assets.