China Trade Re-accelerates in May; AI and Energy as Core Drivers

Overview

Deutsche Bank released a commentary on China's macro trade, noting that China's trade momentum further accelerated in May 2026, supported by 'AHEAD' factors and increased energy and petrochemical trade flows. Export growth hit a record high on a seasonally adjusted basis, while imports also staged a strong rebound. Based on robust trade performance, the firm maintains its full-year import and export growth forecasts unchanged, sees greater upside than downside risks, and remains optimistic about the RMB exchange rate.

Core views

Exports exhibited structurally high growth. China's export YoY growth climbed from 14% in the previous four months to 19.4% in May, reaching a record high after seasonal adjustment. This growth was primarily driven by 'AHEAD' factors, which contributed as much as 16 percentage points to overall export growth. Notably, AI-related exports performed exceptionally well, with YoY growth doubling from 42% in Jan-Apr to 81%, increasing their contribution to export growth from 5 to 10 percentage points. Additionally, exports of energy and petrochemical products strengthened significantly; refined oil export growth rebounded sharply from -1% to +27%, and plastic export growth accelerated from 7% to 12%, indicating that China retains distinct pricing advantages in energy-intensive industries. Regionally, emerging markets remained resilient while demand from developed markets re-accelerated. Exports to ASEAN, Africa, and Latin America maintained steady growth of around 18%, contributing 6 percentage points to overall growth. Meanwhile, exports to major developed markets including the US, Japan, South Korea, and Taiwan surged, with aggregate growth jumping from 2% to 30%, largely driven by strong AI-related demand. The rebound in exports to the US also reflects fading tariff disruptions; a low base in May last year and recent bilateral engagements have supported the gradual normalization of trade flows. Imports accelerated in tandem, with lag effects in energy imports becoming apparent. Import YoY growth accelerated from 23% to 27.4% in May. Consistent with export trends, import momentum for machinery, particularly AI-related goods, continued to strengthen, and imports of metals such as copper maintained an upward trend. Notably, energy imports strengthened significantly, with volumes of crude oil, coal, and natural gas all accelerating sharply, mainly reflecting a lagged response to increased shipments from major suppliers to China in Mar-Apr. Regarding outlook and FX views, the report reiterates full-year forecasts of 12% export growth and 15% import growth, noting upside risks if energy and petrochemical trade momentum strengthens further. Against the backdrop of robust trade activity, the firm holds a constructive view on the RMB, expecting it to appreciate to 6.55 by end-2026 and further to 6.30 in 2027.

Analysis framework

The report employs a three-dimensional decomposition method—'Aggregate + Structural + Regional'—to analyze trade data. First, it confirms marginal changes in total trade volume via YoY growth and seasonally adjusted MoM data. Second, it utilizes a proprietary 'AHEAD' factor model for attribution analysis to quantify the specific contribution (in percentage points) of new drivers like AI and new energy versus traditional drivers to export growth. Third, it cross-validates findings by destination (developed vs. emerging) and product category (machinery vs. energy), identifying AI demand and energy pricing advantages as the core logic behind this acceleration. Finally, it derives FX trends by combining trade surplus data with fundamental trends. This analytical approach not only explains 'how much growth occurred' but also clearly answers 'why it grew' and 'whether it is sustainable.'

Methodology notes

• Macroeconomic framework

  AHEAD Factor Attribution Analysis

  The report uses a proprietary 'AHEAD' factor to quantify the contribution (in percentage points) of specific structural drivers (e.g., AI, high-tech manufacturing) to total export growth. This method decomposes volatility in macro data into specific industrial drivers, helping investors determine whether growth stems from cyclical recovery or structural upgrading.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Volume-Price and Product Structure Decomposition in Trade Data

  By analyzing growth disparities across different categories (e.g., AI products, refined oil, plastics), the report distinguishes between high-value-added growth driven by technology cycles and commodity growth driven by cost/pricing advantages. This decomposition helps assess the quality and sustainability of trade improvement rather than focusing solely on aggregate figures.

• Macroeconomic framework

  Identification of Lag Effects in Trade Data

  The report notes that the surge in energy imports in May reflects a lag from overseas shipments in Mar-Apr. In international trade analysis, considering shipping schedules and customs clearance delays, import data often lags exporting country shipment data by 1-2 months. Identifying this timing mismatch is crucial for accurately assessing current real demand.

Key data

• May Export YoY Growth19.4%Further improved from 14% in the previous four months; record high on a seasonally adjusted basis
• AI-Related Export YoY Growth81%Doubled from 42% in Jan-Apr; contributed 10 percentage points to export growth
• Refined Oil Export YoY Growth+27%Rebounded sharply from -1% in Jan-Apr, demonstrating pricing advantages in energy-intensive industries
• Export Growth to Developed Markets30%Covering US, Japan, HK, and Taiwan; surged significantly from prior 2%, driven by AI demand
• May Import YoY Growth27.4%Accelerated from prior 23%, led by energy and machinery products
• End-2026 RMB Exchange Rate Forecast6.55Based on constructive view amid robust trade activity; 2027 target at 6.30

Impact & implications

The report suggests that current robust trade data validates that China's competitive advantages in the AI supply chain and energy/chemical sectors are translating into actual export market share. For the market, this implies that external demand continues to provide solid support for economic growth, with a better-than-expected structure. Supported by both a widening trade surplus and enhanced industrial competitiveness, the RMB has a foundation for medium-term appreciation. Meanwhile, active energy and petrochemical trade also provides positive signals for related commodity prices and the shipping sector.

Risks

• Failure of energy and petrochemical trade momentum to sustain strength could lead to actual performance falling short of upside risk expectations
• Changes in tariff policies or bilateral relations could once again disrupt trade flows to developed markets such as the US

What to watch

• Whether trade flows of energy and petrochemical products maintain strength in coming months
• Sustainability of AI-related export growth against a high base
• Latest developments in Sino-US bilateral interactions and tariff policies