AI and Asian Capex Cycle Strengthen, China's 2026 Export Growth Forecast Raised to 20%

Overview

Based on July 2026 trade data, the report raises China's import and export growth forecasts for 2026 to 2027. The core judgment is that global AI investment remains in a strong upcycle, and the Asian capex cycle is expanding from the electronics sector to machinery, industrial materials and energy transition. Meanwhile, rising prices for AI hardware, gold and non-ferrous metals have significantly lifted USD-denominated trade values. Trade resilience will moderately support industrial production, investment, corporate profits and nominal GDP, but its direct incremental contribution to real GDP is limited, while consumption and traditional labor-intensive sectors remain weak.

Core views

First, the strength in 2026 trade is mainly driven by investment-related products rather than consumer goods, with electronics, machinery and industrial materials forming the main body of export growth. Second, the acceleration in nominal exports comes more from price increases, while export volume growth rises only from 9.3% in 2025 to about 10%; import growth is likewise supported by commodity and AI hardware prices. Third, China's deep integration in electronics and new energy supply chains, together with its advantages in industrial scale, complete supply chains and engineering talent, is expected to support continued gains in its non-energy trade share. Fourth, trade improvement will bring better spillovers to industrial production, investment and profits, but it is hard to change the K-shaped recovery pattern of weak consumption. Fifth, near-term policy will prioritize deploying the existing potential fiscal impulse of around RMB 2 trillion, while additional easing will depend on summer domestic demand and policy execution.

Analysis framework

The report analyzes customs trade totals, contribution by product category, price-volume decomposition, trade partner structure and macro accounting, and uses AI capex, the Asian industrial investment cycle and China's supply chain upgrading as the medium-term forecast framework. In assessing growth impact, the report distinguishes the mechanical contribution of net exports to real GDP from the indirect spillovers of trade to industrial production, investment, profits and nominal GDP.

Methodology notes

• Trade Growth DecompositionPrice and Volume Decomposition of Nominal Trade

  Decompose USD-denominated import and export growth into real trade volume growth and price changes.

  Export volume grew 10.3% in the first half of 2026, significantly below nominal export growth of 17.7%, indicating that most of the acceleration came from AI-related hardware price increases and mild RMB appreciation against the USD; import volume grew about 8%, implying that roughly 18 percentage points of nominal import growth came from price factors.

• Structural Contribution AnalysisDecomposition of Growth Contribution by Product Category

  Measure each category's contribution to overall trade growth by electronics, machinery, industrial materials, consumer goods, energy and commodities.

  This framework shows that electronics were the largest driver of import and export growth in the first half of 2026, contributions from machinery and industrial materials to exports were also expanding, while consumer goods exports and non-electronic machinery imports were relatively weak.

• Macro Growth AccountingNet Export GDP Contribution and Industrial Spillover Analysis

  Distinguish the direct accounting contribution of net exports to real GDP from the indirect impact of trade on production, investment, profits and nominal GDP.

  The direct contribution of net exports is expected to rise only slightly, but stronger trade volumes and prices can improve profits in the electronics industry and provide moderate support for industrial production and capex.

• Medium-Term Scenario ForecastingStructural Capex Cycle Framework

  Use AI infrastructure, energy and energy transition, defense spending and supply chain localization as the four pillars of the Asian capex cycle.

  The report argues that these drivers are structural, and corporate balance sheets in major economies outside China are relatively healthy, making this round of capex expansion more sustainable than traditional cycles.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China semiconductor and computer hardware supply chain

  Direct beneficiary of AI capex and global electronics supply chain demand.

  Strengths

  Electronics are the largest source of contribution to export and import growth, and China is highly integrated into the regional electronics supply chain.

  Weaknesses

  A large portion of nominal growth relies on price increases, and AI capex growth is expected to slow in 2027.

  Comparison

  Compared with consumer goods exports, electronics contribute significantly more to 2026 trade growth.

  Risks

  Rapid normalization of AI hardware prices, weaker-than-expected global technology investment and geopolitical restrictions.

• Industrial machinery and industrial materials

  Benefit from the spread of the Asian capex cycle from the electronics sector to broader investment goods.

  Strengths

  General machinery exports grew 31.4% year on year in July 2026, and exports to ASEAN grew 38.4% year on year.

  Weaknesses

  On the import side, non-electronic machinery and transportation equipment remain weak, indicating that domestic equipment demand has not improved broadly.

  Comparison

  Export momentum is expanding from electronics alone to machinery and materials, but its intensity remains below that of core technology products.

  Risks

  Weakening global industrial cycle, energy input shocks and delayed regional capex.

• New energy vehicle, battery and photovoltaic supply chains

  China's green product supply chains are potential beneficiaries of global energy transition capex.

  Strengths

  They have advantages in industrial scale, supply chain completeness and engineering talent, and their long-term export market share still has room to rise.

  Weaknesses

  The report notes that new export growth drivers are gradually shifting to AI, robotics and pharmaceuticals, and the marginal dominance of traditional green products may decline.

  Comparison

  The “new three” still maintain rapid growth, but the “next-generation new three” have become a stronger driver since late 2025.

  Risks

  Trade barriers, supply chain localization policies, changes in overseas demand and price competition.

• Gold, copper and other non-energy commodities

  Price increases are an important source of nominal import growth in 2026.

  Strengths

  Gold and non-energy commodities contributed 7.3 and 6.0 percentage points, respectively, to import growth in the first half.

  Weaknesses

  Price contributions far exceed volume contributions, making nominal trade performance highly sensitive to commodity prices.

  Comparison

  Gold contributes more to import growth than general non-energy commodities, while energy imports are broadly flat.

  Risks

  A reversal in gold, copper and other commodity prices would significantly depress nominal import growth.

• Renminbi

  Mild RMB appreciation against the USD provides some price support for USD-denominated export growth.

  Strengths

  The trade surplus and export resilience can provide fundamental support for the exchange rate.

  Weaknesses

  Appreciation may weaken the competitiveness of some price-sensitive export industries.

  Comparison

  The exchange rate is only an auxiliary factor in nominal export acceleration; AI hardware price increases are the more important driver.

  Risks

  Global interest rates, capital flows, policy easing expectations and geopolitical changes.

Key data

• 2026 export growth forecast20%USD-denominated; previous forecast was 10%, and actual growth in 2025 was 5.4%.
• 2026 import growth forecast26%USD-denominated; previous forecast was 15%, and actual growth in 2025 was 0.2%.
• 2027 export and import growth forecast11% / 9%Previous forecasts were 9% and 2%, respectively; expected to normalize from the 2026 highs.
• 2026 export and import volume growth forecast10% / 8%They were 9.3% and 0.6%, respectively, in 2025.
• Nominal export growth in the first half of 202617.7%Higher than 5.4% in 2025, with electronics contributing 10.4 percentage points.
• Nominal import growth in the first half of 202626.3%Electronics, gold and non-energy commodities contributed 12.7, 7.3 and 6.0 percentage points, respectively.
• Export and import growth in July 202623.9% / 27.5%Exports were slightly above market expectations of 23.0%, while imports were below market expectations of 29.5%; overall in line with expectations.
• AI capex by hyperscale cloud service providersAbout USD 877 billion (2026); over USD 1.3 trillion (2027)Year-on-year growth is expected to slow from 90% in 2026 to 53% in 2027.
• Contribution of net exports to real GDP growth0.9 percentage points in the second half of 2026; average of 0.8 percentage points in 2027It was 0.8 percentage points in the first half of 2026, indicating a relatively moderate direct incremental contribution.
• Real GDP year-on-year growth forecast for the second half of 20264.6%Higher than 4.3% in the second quarter of 2026, supported by fiscal deployment and stronger real goods exports.

Impact & implications

The upgraded trade forecasts are positive for China's electronics, semiconductor, computer hardware, industrial machinery, materials and new energy supply chains, and may improve related manufacturing output, capex and profits. Commodity price resilience is positive for nominal imports and demand for resource products, but it also means that total trade value is sensitive to price declines. At the macro level, external demand resilience provides a growth buffer, making policy more likely to prioritize accelerating the deployment of existing fiscal resources rather than immediately launching large-scale new stimulus; however, consumption growth is still expected to be only around 4%, traditional labor-intensive industries remain weak, and sector divergence in the economic recovery will continue.

Risks

• Geopolitical uncertainty persists or worsens, weakening the global industrial and capex cycle.
• Severe energy input volume shocks could weigh on production and global investment demand.
• AI hardware export prices normalize faster than expected, depressing nominal export growth.
• A reversal in gold, copper and other commodity prices leads to a significant pullback in nominal import growth.
• The Asian capex cycle or global investment boom falls short of expectations.
• Domestic consumption and traditional labor-intensive industries remain weak, further intensifying the divergence in the recovery.
• The pace of deployment of existing fiscal resources or the effectiveness of policy implementation falls short of expectations.

What to watch

• Domestic demand, consumption and real-estate-related data from August to September 2026.
• Whether additional fiscal or monetary easing measures are introduced from September to October.
• Changes in AI-related hardware prices and semiconductor and computer export volumes.
• Whether Asian capex continues to expand into machinery, industrial materials and energy transition.
• Export growth to ASEAN, South Korea and Taiwan, and the intensity of regional supply chain trade.
• Gold, copper, coal and crude oil prices and import volume trends.
• The actual deployment progress of the potential fiscal impulse of around RMB 2 trillion.
• Whether improved electronics industry profits can spread to broader manufacturing and employment.