China's May trade figures, released Tuesday, beat every forecast in sight. Exports rose 19.4 percent from a year earlier, well above the 15 percent economists expected and faster than April's 14.1 percent. Look one layer down, though, and this is not a story about Chinese trade broadly. It is a story about one sector carrying the rest. Exports of integrated circuits more than doubled, up 111 percent by value, the strongest growth since 2013. Shipments of computers and parts rose 66 percent, the fastest pace since 2010. High-tech goods overall climbed roughly 50 percent. Meanwhile furniture exports rose less than 2 percent, toys fell 7 percent, and footwear dropped more than 10 percent.
The global AI buildout has, in effect, become a customer of last resort for the world's largest manufacturer. Data centre construction across the US, Asia and the Gulf is pulling in Chinese-made chips, optical modules, servers and components at a pace that has offset what analysts assumed would be a punishing year. The war in Iran has pushed energy prices up worldwide, and overseas buyers spent part of the spring stockpiling against further disruption. ANZ's Xing Zhaopeng noted that memory prices alone rose 20 percent month on month, inflating the value of chip shipments. As he put it, chips are rewriting China's trade landscape.
The same data shows how narrow the foundation is. Economists describe China's trajectory as K-shaped: booming factories in AI-adjacent fields, persistent weakness almost everywhere else. Retail sales growth may hit zero in May, manufacturing employment keeps contracting even as exports soar, and the property market remains depressed. Bank of America's economists cautioned that the import surge, up 27.4 percent, is concentrated in chips and gold rather than signalling any genuine rebalancing toward domestic demand. The boom may even be delaying the fix; strong exports, they argue, reduce Beijing's urgency to stimulate consumption.
The geopolitics are just as double-edged. Shipments to the United States jumped 35 percent, the strongest growth since 2021, though much of that reflects comparison against last year's tariff-crushed numbers. China's monthly trade surplus reached $105.4 billion, and a new US Federal Reserve paper finds the country's surplus as a share of global GDP has passed 1 percent, above anything Japan or Germany managed in their export heydays. The OECD added a pointed footnote last week: nearly 60 percent of Chinese firms' market share gains can be explained by subsidies. Europe, watching its own imports from China grow much more slowly than everyone else's, is increasingly vocal about overcapacity.
And the next chapter is already being drafted. A Korea Herald report on Toss Securities' research trip to Shenzhen describes Chinese firms applying the smartphone and electric vehicle playbook, scale, cost and fast commercialisation, to humanoid robots, complete with a popcorn-selling humanoid in a shopping mall. The thesis from the brokerage's research head is worth sitting with: the AI competition will be decided not by who builds the best model, but by who applies AI across the widest range of industries. May's trade data is what that strategy looks like in a customs ledger. The open question is how long the rest of the world keeps buying.