Summary of Key Points
In the first half of 2026, China's imports and exports (denominated in US dollars) increased by 21.2% year-on-year (17.6% for exports and 26.6% for imports), reaching new highs in the past two years. On the surface, this growth appears impressive, but it was primarily driven by price increases (the rise in prices of precious metals, metal ores, and computing hardware contributed 16.6 percentage points to imports, while the increase in export prices of computing hardware accounted for another 6.6 percentage points). The base effect (compared to 2024) was not the main factor behind this growth; instead, long-term trends such as industrial upgrading (strong growth in computing hardware and three new types of exports) and diversification of trading partners (led by ASEAN and RCEP countries) are at play. At the same time, both volume recovery and structural optimization are also progressing.
I. Impressive Growth in Imports and Exports, but Driven by Price Increases Rather than Increased Sales
Many people might assume that the double-digit growth in imports and exports means our products are selling better or being purchased in larger quantities. However, most of this growth is due to higher prices.
- On the import side: Prices of precious metals (jewelry), metal ores (such as copper ore), and computing hardware (chips, storage components) rose significantly. For example, imports of precious metals increased by 178%, with half of that increase coming from price hikes; imports of computing hardware increased by 55.8%, of which 44% was due to price increases. These three categories collectively contributed 16.6 percentage points to the overall import growth. After adjusting for price factors, the actual import growth was around 10%, indicating that volume is also gradually recovering.
- On the export side: Higher prices of computing hardware contributed 6.6 percentage points to export growth. After accounting for these price effects, the actual export growth was about 11%, showing strong underlying momentum.
II. The Base Effect Is Not the Main Reason for the Growth
Some might argue that the impressive growth is due to a poor base in the same period last year. However, this is not the case this time.
- Exports: Exports to the United States declined by 10.9% in 2025, but there was only a slight increase in 2026, so the overall export growth did not rely on a lower base from the previous year.
- Imports: Imports were negative in 2025, but when compared to 2024, they grew by an average of 10.4% year-on-year, indicating that the import growth rate has indeed improved and is not due to a poor baseline.
III. Price Drivers: Short-Term Fluctuations vs. Long-Term AI Industry Trends
The same price increases have different underlying reasons:
- Short-term fluctuations: Price increases in precious metals and metal ores (such as copper ore) are driven by short-term factors. For example, when gold and silver prices rise, people spend more on jewelry. The increase in copper ore prices is due to temporary demand surges, but for oil and gas, higher prices have led to reduced purchases, offsetting the positive impact of the price increases. These fluctuations are likely to subside over time.
- Long-term trends: Price increases in computing hardware (chips, storage components) reflect the explosive growth in the AI industry. There is a global demand for AI-related equipment, leading to supply shortages and price hikes. Our imports of these components are for producing higher-end products, indicating that future exports are likely to increase—current imports are essentially a form of investment for future growth, which is a sign of industrial upgrading.
IV. Industrial Upgrading and Diversification of Trading Partners: The Foundation for Sustainable Foreign Trade
Beyond short-term price changes, long-term trends are more significant:
- Industrial upgrading: Machinery and electronic products (24.5% growth) and high-tech products (38.5%) are driving the export growth. The three new types of exports (lithium batteries, pure electric vehicles, hybrid vehicles) grew by 51.6%, with both volume and price increases, indicating that our products are becoming more sophisticated. The proportion of intermediate goods (used in production) and consumer goods in imports has increased, suggesting that China is moving up the global supply chain.
- Diversification of trading partners: Imports and exports to ASEAN and RCEP countries grew by 22.5% and 27.3%, respectively. The share of the top ten trading partners decreased from 54.5% in 2020 to 47.7% in 2025, indicating that we are no longer heavily dependent on a few countries, diversifying our risks and meeting the needs of developing economies.
V. Re-exports and Re-imports: Hidden Elements in the Trade Chain
It is important to note that imports and exports include re-exports and re-imports:
- Re-exports: Exports to Hong Kong increased by 4 percentage points, with half of this amount flowing back to the Chinese mainland (for example, chips and jewelry being transshipped through Hong Kong). This contributed 2 percentage points to the overall growth.
- Re-imports: 3.1 percentage points of imports consisted of goods originally produced in China, indicating active trade activities within the supply chain.
Conclusion
While price increases played a significant role in this year's foreign trade growth, volume recovery and structural optimization are also real phenomena. In the short term, the rise in commodity prices is temporary. In the long run, the growth in AI-related computing hardware and the three new types of exports, along with the diversification of trading partners, will be the key drivers of China's future foreign trade development. These changes indicate that China's foreign trade strategy is shifting from focusing on volume at lower prices to emphasizing quality and higher-end products.