China’s recent foreign trade performance has generally been better than expected.
Over the past year and more, despite more external uncertainties, China’s exports and imports have performed better than market forecasts many times.
Compared with external demand, boosting domestic demand still faces greater challenges. Therefore, it is necessary to understand the high-quality development of foreign trade from three aspects: recent trends, external risks and policy responses.
1. The recent foreign trade has been relatively resilient, and the AI super cycle and green transformation have become important supports
From January to April this year, China’s exports and imports both achieved double-digit growth.
In U.S. dollars, exports increased by 14.5%, imports increased by 23.6%, and import growth exceeded export growth; the trade surplus reached 348 billion U.S. dollars, which, although slightly lower than the same period last year, was still at a high level.
The above data show that China’s foreign trade is still highly resilient.
Technology, especially the artificial intelligence super cycle, is an important driving force for recent trade growth.
This cycle not only affects exports, but also imports; it is not only reflected in trade volume, but also in price changes.
In April, computer and integrated circuit exports increased by 47% and 99% respectively, and integrated circuit export prices also increased significantly, reflecting the shortage of related products.
From the perspective of imports, imports of computers and integrated circuits have also maintained rapid growth, indicating that China is deeply embedded in East Asia and even the global artificial intelligence industry chain, and the equally eye-catching trade data of neighboring economies reflect the huge impact of the super cycle.
From the perspective of export structure, China’s “three new” exports continue to remain strong, and renewable energy and green development-related products are still highly competitive.
In contrast, the export growth rate of labor-intensive products and home appliances has been relatively stable, indicating that China’s export growth momentum is shifting from traditional low-cost products to areas with higher technological content and more complex industrial chains.
The US-Iran conflict and the resulting changes in energy prices have had a certain impact on imports and exports.
On the one hand, rising oil prices have pushed up related import prices; on the other hand, uncertainty in energy supply has also affected the import and export quantities of some products.
In April, refined oil exports dropped significantly both month-on-month and year-on-year, and crude oil imports and refined oil imports also experienced double-digit declines. At the same time, China’s energy imports from Russia, Canada and other countries grew rapidly, and the sources of imports became increasingly diversified.
This all shows that geopolitical impacts have been transmitted to the trade side through energy channels.
From the perspective of trading partners, China’s export market is still relatively broad.
In April, China’s exports to the United States turned positive, with a year-on-year increase of approximately 11%. Imports from the United States also increased for two consecutive months, with a year-on-year increase of approximately 9%.
This shows that after the meeting between the heads of state of China and the United States at the end of October last year, bilateral trade showed signs of recovery.
In the longer term, China already has a strong advantage in exporting artificial intelligence-related products.
According to relevant estimates, China has become the world’s largest exporter of AI-related products in 2025, with related product exports accounting for approximately 19% of China’s overall exports.
China has a relatively complete industrial chain advantage in mid- to low-end integrated circuits, computing infrastructure, hardware manufacturing, power supply, and application scenarios. These advantages will continue to support foreign trade performance.
Green transformation is also an important source of China’s export competitiveness.
The proportion of non-fossil energy in China’s energy consumption will reach 21.7% in 2025, a significant increase from the level of about 7% in 2005.
During the “15th Five-Year Plan” period, China will continue to promote the transformation of its energy structure.
Changes in the situation in the Middle East may prompt Europe, Southeast Asia and other regions to re-accelerate the green development agenda. China’s comparative advantages in new energy equipment, energy storage, renewable energy industry chains and other fields are expected to be further reflected.
It should be noted that the recent strong foreign trade data also includes price factors.
Oil prices, copper prices and integrated circuit prices all rebounded rapidly, especially the rise in import prices, which was an important reason why the import growth rate was higher than the export growth rate.
After excluding price factors, net exports are still expected to make a positive contribution to China’s economic growth, but price changes will affect the judgment of the true momentum of trade.
2. The risk of protectionism is rising, and China-EU trade friction deserves special attention
In terms of external risks, Sino-US trade relations are currently relatively stable.
After the meeting between the heads of state of China and the United States, the trade truce between the two sides may continue for a period of time.
China may increase imports of agricultural products, aircraft engines and energy, and reciprocal tariff adjustments will also help restore some exports to the United States.
At the same time, some U.S. tariff measures face legal constraints, and some of the trade previously realized through re-exports may reappear as direct trade data between China and the United States.
However, while Sino-US trade is easing in stages, Sino-European trade conflicts are on the rise.
On the one hand, China’s exports to Europe are growing, while Europe’s exports to China are relatively weak, and the trade imbalance between China and Europe has expanded; on the other hand, China and Europe have a high degree of product overlap in fields such as automobiles and high-end equipment, and competition pressure has increased.
Recently, Europe has imposed additional tariffs on Chinese new energy vehicles and taken anti-dumping measures on steel and other products. Related risks may continue to spread.
Europe is strengthening its own industrial policy and trade policy tools.
Its industrial policy emphasizes local content rules and a “Buy Europe” orientation, involving strategic industries such as steel, batteries, automobiles, photovoltaics, and wind energy. At the same time, Europe is also adopting stricter measures in terms of foreign direct investment review, international procurement tools, foreign subsidy rules, and cybersecurity rules.
These policies will largely affect Chinese companies’ entry into the European market.
Therefore, the risks of trade protectionism faced by China in the future will not only come from the United States, but may also come from Europe and some emerging economies.
As the technical level of China’s export products improves and its international competitiveness increases, the objects and areas of trade friction will become more diversified.
This requires China to pay more attention to trade balance, rule coordination and compliance capacity building while maintaining export competitiveness.
3. Promote the high-quality development of foreign trade through competitiveness improvement, trade balance and exchange rate policy
The discussion of foreign trade in the “15th Five-Year Plan” has important guiding significance. One of the prominent changes is the emphasis on building a trade power and promoting the balanced development of imports and exports.
This means that foreign trade development must not only enhance export competitiveness, but also pay more attention to import expansion and trade structure balance.
For a large economy like China, long-term reliance on external demand to support growth is not sustainable, and high-quality development of foreign trade must be combined with domestic economic balance.
Service trade should also become an important direction for the high-quality development of foreign trade in the future.
When talking about trade in the past, people tended to pay more attention to commodity trade; however, the “15th Five-Year Plan” proposes to vigorously develop service trade, encourage service exports, enhance the international competitiveness of transportation, travel and other services, and develop knowledge-intensive service trade.
In recent years, China’s service trade deficit has narrowed, and the competitiveness of some service exports is increasing, but there is still considerable room for improvement in this area.
In the medium to long term, China’s current account surplus and foreign trade surplus will remain relatively large.
An important reason is that China will continue to emphasize investment in science and technology, self-reliance in science and technology, and integration of science and technology and industry.
The combination of technology and industry can form new foreign trade competitiveness and promote China’s manufacturing industry to move towards the high end.
High-quality foreign trade should no longer rely on low-price competition and small profits but quick turnover, but should rely more on technology, supply chain capabilities and external market stickiness.
In terms of policy, we can promote a more balanced trade from both fiscal and exchange rate perspectives.
In terms of finance, the scope of subsidies and export tax rebates for some products can be gradually narrowed. On the one hand, it will help reduce foreign trade frictions. On the other hand, it can also promote companies to shift from low-price competition to technology and quality competition.
In terms of exchange rate, with the support of fundamentals, the RMB can be allowed to appreciate moderately.
Moderate appreciation of the RMB will help reduce external trade conflicts and promote the internationalization of the RMB.
Assessments by international institutions show that the real exchange rate of the RMB has been somewhat undervalued in recent years, which not only reflects China’s enhanced external competitiveness, but is also related to low domestic inflation and high overseas inflation.
As long as the current account surplus remains at a high level, the RMB exchange rate will have a certain basis for appreciation.
Of course, exchange rate adjustments must be based on fundamentals.
The relatively strong RMB can, on the one hand, increase the purchasing power of Chinese enterprises and residents in allocating assets externally, and on the other hand, it can also enhance the attractiveness of RMB assets to international investors.
Ultimately, the high-quality development of foreign trade requires not only improving export competitiveness, but also promoting the formation of a more balanced open pattern of China’s economy through import expansion, service trade development, fiscal policy adjustments and exchange rate mechanism improvement.
