Commentary: The Real Story Behind China’s Export Surge

In the first half of 2025, China's export growth remained robust, with a 5.9% year-over-year increase. The engine of this growth was primarily driven by emerging economies, which contributed 4.7 percentage points, while non-U.S. developed countries (EU, Japan, U.K.) added 1.4 percentage points. Hong Kong and Taiwan contributed another 1.0 point, whereas the U.S. acted as a drag, reducing growth by 1.5 points. Within emerging markets, ASEAN and India were the key drivers, contributing 5.5 percentage points (ASEAN 4.4 points, India 1.1), followed by the Middle East (1.2 points) and Africa (1.4 points) [para. 1].

By product category, electronic components and light industrial consumer goods such as toys, mobile phones, and jewelry performed strongly. Electronic components and light industrial products grew 8.2% and 6.6% year-over-year, respectively. In capital goods, electrical equipment, precision instruments, and machinery made significant contributions, as did consumer goods like toys, jewelry, mobile phones, and e-commerce categories [para. 2].

Disaggregating exports by destination, growth to emerging economies was largely driven by intermediate (2.4 points) and capital goods (1.0 point), even as consumer goods were a drag (-3.7 points). Exports to non-U.S. developed countries also rose, supported by consumer, intermediate, and capital goods, with particularly strong contributions from lithium batteries, toys, and solar products [para. 3][para. 4].

The phenomenon of “front-loading”—exporters accelerating shipments to avoid potential tariffs—was partly at play in the first half of 2025, especially in U.S. import behavior. U.S. imports surged early in the year, but data indicated this was mainly due to higher imports from the EU, U.K., and Switzerland (focused on gold, silver, jewelry, and pharmaceuticals) rather than a transshipment of Chinese goods via other countries. For ASEAN, export trends did not support the theory that China was using it as a transshipment hub to the U.S. Instead, trade reflected supply-chain integration, where China exported intermediate goods for local processing in ASEAN, which then exported finished goods to the U.S. [para. 5][para. 6][para. 7][para. 8].

For other emerging economies and the EU, strong Chinese export growth reflected real demand rather than front-loading or transshipment. Product structures differed significantly from U.S. imports, reinforcing the view of genuine demand [para. 9]. Overall, front-loading explained only about 30% of July’s export surge, contributing a maximum of 2 percentage points to the 7.2% growth rate [para. 10].

Looking ahead, U.S. front-loading may have led to a temporary spike in imports, but overall U.S. imports have not reached equilibrium with underlying consumption, leaving some room for further import growth. EU imports, however, have reached a balance point with consumption, implying slower import growth in the future [para. 11][para. 12].

China’s exports to ASEAN may face near-term pressure due to new U.S. tariffs, notably a 20% reciprocal tariff on ASEAN and a 40% transshipment tariff on Vietnam, potentially dragging down China’s overall exports by 2 percentage points. Nonetheless, medium-term trends remain robust, driven by ongoing industrialization, urbanization, and foreign direct investment in emerging economies [para. 13][para. 14].

China is also benefiting from rising market share in Africa and the Middle East, largely substituting European suppliers, and is successfully moving up the value chain in consumer goods exports to emerging markets as their middle class expands. High-value-added goods like vehicles and cross-border e-commerce are gaining share, while lower-value-added products are declining [para. 15][para. 16][para. 17][para. 18].