China’s merchandise exports climbed 23.9% year-on-year in July to $397.85 billion, while imports rose 27.5% to $285.35 billion, customs data showed on Friday. The monthly trade surplus narrowed to $112.5 billion from June’s $125.6 billion, but the cumulative surplus for the first seven months reached $687.37 billion, nearly matching the record pace of 2025.

The expansion is being driven overwhelmingly by global demand for data-processing hardware. Overseas shipments of computers and related components jumped 45.2% in January-July, as companies raced to build artificial-intelligence capacity. “Export and import values remain elevated, helped by soaring global demand for electronics and green tech products,” noted Julian Evans-Pritchard of Capital Economics. The figures confirm that China’s manufacturing engine is pivoting toward what Beijing calls “new productive forces”—chips, AI infrastructure and advanced equipment—even as domestic consumption lags.

Viewed from Washington, the trade numbers are adding urgency to an already fraught relationship. China’s exports to the United States rose 17% year-on-year in July, lifting the bilateral surplus to nearly $171 billion through the end of the month. Days before the data release, Beijing had restricted drone exports and blacklisted American firms in retaliation for U.S. sanctions over forced labour and national security. Analysts at Teneo said their base case remains that Xi Jinping’s state visit to the U.S., expected in late September, “will proceed without hiccups and will generate a new modest package of agreements,” though they cautioned that “potential friction points still exist on the horizon.”

Zhiwei Zhang, chief economist at Pinpoint Asset Management, expects “intense negotiations between China and its major trading partners in coming months on what can be done to make trade more balanced.” The Politburo itself has urged a more “balanced” trade development, signalling that Beijing is aware of the growing external pressure. The next milestone is the Xi-Trump summit, where the fate of the one-year trade truce—set to expire in November—will be tested.