China combines trade data for the first two months of the year to avoid distortions from the Lunar New Year holiday. The export growth in January-February 2026 was the biggest gain in four years, according to research. This rapid rise in foreign trade occurred before the US-Israeli attack on Iran, which disrupted shipping in the region, according to multiple reports. The surge underscores a resilient external sector even as China's government set its lowest growth target in decades for this year at '4.5 to 5 percent', according to reports. China's economy is heavily reliant on exports amid weak consumer spending, a shrinking population, and a property market crisis, multiple reports indicate.
China achieved a historic trade surplus of $1.2 trillion in 2025. Official data shows China's GDP grew by 5% in the first quarter of 2026 compared to a year earlier, slightly above the 4.8% growth economists had expected, according to multiple reports. This performance suggests the export engine is compensating for persistent domestic headwinds, though the government has promised measures to support weak consumption, with details remaining scarce, according to reports. The trade surplus of $213.6 billion for the January-February period far exceeded the $169.21 billion recorded in the same period last year, research indicates, and also surpassed economists' forecast of a $179.6 billion trade gap in the poll.
China has taken note of its trading partners' views on the record surplus and aims for balanced development of imports and exports.
A detailed breakdown shows exports to European countries grew by 27.8%, while exports to ASEAN countries climbed by nearly 30%. Sales increased to Japan (8.9%), Hong Kong (38.7%), South Korea (27.0%), Taiwan (28.7%), Australia (29.4%), the ASEAN countries (29.4%), and the EU (27.8%), but shrank to the U.S. (-11.0%), according to research. Semiconductor exports rose an annual 66.5%, the fastest growth in well over a decade, buoyed by a global memory chip shortage, research shows. Sales of refined oil products, including diesel, gasoline, aviation fuel, and marine fuel, rose 12.7% to 8.13 million tons, according to research. According to www.globalbankingandfinance.com, Xu Tianchen described the strength in integrated circuits and technology exports as well expected, in line with the artificial intelligence investment boom.
Domestic economic indicators for January-February 2026 showed a mixed recovery. Industrial production rose by 6.3% compared to the same period last year, the fastest growth rate since September, according to data from the country's statistics bureau, exceeding the 5% growth economists had expected. Retail sales increased by 2.8%, more than three times faster than in December and slightly above the 2.5% growth forecast by economists, multiple reports indicate. Fixed asset investment unexpectedly grew by 1.8% after shrinking for the first time ever in 2025, according to reports from Bloomberg. Tourist spending rose by almost 19% compared to the same holiday last year, while infrastructure investments increased by over 11%, the fastest growth for the period since 2021, multiple reports show.
The strength in integrated circuits and technology exports is well expected, in line with the artificial intelligence investment boom.
China faces a 10% US tariff on most goods, but US Treasury Secretary Scott Bessent said tariffs may be restored to pre-Supreme Court levels by early July, according to reports. China's exports to America fell more than 10% as Trump imposed tariffs, multiple reports indicate, with fresh figures on Tuesday showing a sharp decline of 26.5% in March 2026 compared to the same month last year. President Trump’s renewed 2025 tariffs barely slowed China’s industrial momentum, as manufacturers redirected exports to Southeast Asia, Africa, and Latin America to offset the impact of U.S. tariffs, according to research. According to www.globalbankingandfinance.com, Xu Tianchen described China's export momentum could accelerate further in the near term, with March data likely to show factories rushing shipments to the U.S. to exploit the Supreme Court's tariff reprieve.
The looming threat of the US-Israel conflict with Iran poses a significant risk to global trade and shipping. The US-Israel war with Iran started on 28 February, disrupting global energy supplies, according to multiple reports. The Strait of Hormuz is a chokepoint for one-fifth of global oil, research indicates. Economists say it's still too soon to know whether U.S. and Israeli strikes on Iran - and the shutdown of the Strait of Hormuz - will derail manufacturers in the months ahead. First effects of the Iran conflict might show in March data for China's foreign trade, according to multiple reports, and China imports oil from Iran, which could be directly impacted.
Growth in clothing, textiles and bags exports was surprising, given their poor performance in 2025 amid challenges from Southeast Asia and South Asia.
In anticipation of potential disruptions, China stockpiled key commodities needed by its manufacturers, including iron ore and crude oil, in the first two months of the year, research shows. The data reinforces policymakers' conviction that heavier investment in strategic sectors will lock in China's grip on global supply chains, according to research. This strategic positioning aims to buffer against external shocks, though the exact breakdown of stockpiled commodities and their effect on manufacturing costs remains unclear. According to www.globalbankingandfinance.com, Dan Wang described rapidly rising global defence spending could lift external demand for Chinese industrial goods.
China's trade relationship with North Korea also saw significant developments in early 2026. China-North Korea trade surged 22% in the first two months of 2026, reaching $418.7 million, according to customs data. The top export to North Korea was human hair for wig making, valued at $24.3 million, down 26% from a year earlier, multiple reports indicate. Shipments of tungsten ores rose to become China's second-largest import from North Korea at $15.4 million, according to multiple reports. China and North Korea restarted their inter-capital train service from 12 March, and Air China will restart flights from 30 March, multiple reports show.
China's export momentum could accelerate further in the near term, with March data likely to show factories rushing shipments to the U.S. to exploit the Supreme Court's tariff reprieve.
Sector-specific drivers and drags on China's economic growth reveal a complex picture. Growth was driven by manufacturing, while weighed down by falling property investment, according to multiple reports. According to www.globalbankingandfinance.com, Xu Tianchen described growth in clothing, textiles and bags exports as surprising, given their poor performance in 2025 amid challenges from Southeast Asia and South Asia. According to www.globalbankingandfinance.com, Xu Tianchen also described Chinese firms muscling back into low value-added sectors like textiles. According to www.globalbankingandfinance.com, Dan Wang described big demand for China's 'New Three': electric vehicles, lithium-ion batteries and solar cells.
According to Realtid, economists at think tank CF40 in Beijing described the rapid recovery as showing macroeconomic policy is actively providing support. However, the government's specific measures to bolster weak consumption have not been detailed, leaving a key uncertainty for domestic economic stability. Trade Minister Wang Wentao stated that China has taken note of its trading partners' views on the record surplus and aims for balanced development of imports and exports, according to reports. This suggests official awareness of trade imbalances, though concrete policy shifts remain to be seen.
Chinese firms are muscling back into low value-added sectors like textiles.
China’s resilient exports and lower 2026 GDP growth target could delay the rollout of economic stimulus, according to analysts. According to www.scmp.com, Larry Hu described the surge in exports as mainly a reflection of strong global demand, especially for tech products, which are central to many economies. Whether this momentum lasts will depend largely on how long the AI-driven tech boom continues, according to www.scmp.com, Larry Hu described. This creates uncertainty about whether the AI-driven tech boom can sustain China's export momentum beyond the first quarter of 2026.
Key unknowns persist regarding the impact of external conflicts and domestic policy. How severely the US-Israel war with Iran and the Strait of Hormuz closure will impact China's exports and supply chains in the coming months remains unclear. Future US-China trade dynamics are also uncertain, particularly regarding how they will evolve after the potential restoration of pre-Supreme Court tariff levels by early July. The sustainability of export growth hinges on multiple volatile factors, from geopolitical tensions to shifting global demand patterns.
Rapidly rising global defence spending could lift external demand for Chinese industrial goods.
There is big demand for China's 'New Three': electric vehicles, lithium-ion batteries and solar cells.
The surge in exports is mainly a reflection of strong global demand, especially for tech products, which are central to many economies.
Whether the momentum lasts will depend largely on how long the AI-driven tech boom continues.
The rapid recovery shows macroeconomic policy is actively providing support.