Lower Growth in China
In early March, Chinese leadership set their lowest gross domestic product growth target since 1991, forecasting a 4.5% to 5% expansion for its economy in 2026.
This week, China reported a 21.8% year-on-year increase in exports for January and February to $656.6 billion. To avoid distorted numbers because of Chinese New Year, the government in Beijing always reports combined trade data for the two months of the year.
This big increase handily beat analyst predictions, and, after a modest 6.6% year-on-year bump in December, defied aggressive action by the U.S. to curb commerce with China.
Part of the Chinese trade resurgence is due to an intentional strategy by Chinese policymakers to goose exports by cutting prices and finding new markets. Exports to ASEAN countries rose 29.4% to $112.6 billion, while shipments to the EU expanded 27.8% to $101 billion.
The AI Global Trade Economy
Another reason for the increase is the booming tech economy based around intense investments in artificial intelligence technology. China’s exports of integrated circuits, a category which includes the semiconductors used to power AI systems, increased 72.6% to $43.3 billion. Imports of those circuits jumped 39.8% to $78.2 billion.
The AI buildout is happening around the world, and it’s changing the composition of the Chinese tech economy. Suppliers once flocked to China to manufacture finished consumer goods like smartphones. Now, they’re more likely to make electronic and industrial parts in China that then get finished in other countries. That’s why exports of mobile phones dropped 8.3% to $17.1 billion, even as overall shipments of high-tech products rose 26.9% to $167.2 billion.
One consumer product China is still dominating: Cars. Chinese exports of motor vehicles kept on vrooming upward, rising 57.9% to 1.5 million units. By value, they increased 67.1% to $27 billion.
China’s surplus only appears to be growing, raising the stakes around the world for protectionist policies. In 2025, China ran a record $1.2 trillion surplus.
U.S.-China Trade in Flux
In one respect, the U.S. strategy to restrict trade is working: Exports to the U.S. dropped 11% to $67.2 billion. In February, the Supreme Court ruled that the Trump administration was illegally using an emergency power to apply tariffs on foreign imports. In response, Trump promised to a standard 10% tariff that he will eventually bump up to 15%. That could end up helping China, as it lowers their tariff rate relative to other countries.
However, China has been ramping up exports to other countries. Sales to France rose 31.9% to $8.5 billion, exports to Italy leapt 36.4% to $9.9 billion, and shipments to Russia rose 22.7% to $18.3 billion.
China has abandoned the low-tech staples of its early economic development, but with so much capacity, there have been occasional resurgence in the manufacture and exports of some categories. Exports of furniture, for example, rose 24.7% to $12.4 billion. However, shipments of toys ticked up only 1.5% to $5.1 billion.
The Importance of the Chinese Consumer
Despite the low growth expectations, total imports increased 19.8% to $443 billion. China’s consumers have more appetite, and money, for purchasing foreign goods. Policymakers in Beijing have been focused on getting consumers in China to spend and invest more. At the same time, exporting manufacturers need raw materials and parts for making their goods. Imports of high-tech products increased 27.7% to $139.8 billion.
One thing is certain: They’re not buying American. Imports from the U.S. fell 26.7% to $19.4 billon. Trump is due to visit China at the end of March.
By comparison, imports from the European Union increased 11.7% to $41.2 billion, and purchases from ASEAN nations rose 12.9% to $63.9 billion. One region increasingly benefitted from China’s importing strategy is Latin America. Imports, mostly of commodities like copper, iron ore, and soybeans, jumped 28.9% to $46.5 billion. Notably, imports from France rose 28.2% to $6.1 billion, and imports from Russia increased 4.1% to $20.8 billion.
One item China will likely have to import more of is petroleum, as the war in Iran scrambles supply routes around the Strait of Hormuz. In the first two months, China hiked imports of crude 15.8% to 96.9 million tons.