China's exports rose more than expected in July, topping forecasts even as growth eased from June's blistering pace, as global demand for high-tech components continued to absorb the country's goods despite a fresh round of trade friction with Washington.

According to official customs data released Friday, exports grew by approximately 23% in US dollar terms from a year earlier, ahead of the roughly 22% growth economists had forecast. That figure, however, was slower than June's roughly 27% surge, which had been the fastest pace since October 2021. Imports rose by around 27.5% last month, just shy of forecasts near 28%, and a notable slowdown from June's roughly 36% jump, itself the quickest in five years. The trade surplus came in at around $112 billion, exceeding analyst estimates of roughly $107 billion, while narrowing from about $126 billion in June.

A worldwide build-out of AI infrastructure has helped support China's economy through a year of geopolitical shocks, keeping export growth on track even as domestic consumption has stayed subdued. Continued strength in AI-linked exports reinforces the broader narrative of resilient tech demand propping up regional growth, a theme relevant to Asian equities and currencies exposed to the AI supply chain, including South Korea's chip exporters.

Part of the export strength also reflected Chinese manufacturers racing goods onto US-bound vessels ahead of an anticipated tariff increase. Washington applied a new levy of around 12.5% on Chinese products in late July, replacing a temporary lower rate that had expired. Such front-loading patterns, widely observed during earlier phases of the US-China trade dispute, typically pull future orders forward and can be followed by a softening in shipments once the higher tariff takes effect.

Beijing's trade surplus, which topped $1 trillion for the full year in 2025, remains a persistent point of friction with major trading partners including the United States and the European Union, both of which have pressed China to rebalance its economy toward domestic consumption. The EU has separately moved to impose provisional duties on Chinese electric vehicles, broadening the scope of trade tensions beyond the bilateral US-China channel.

The data landed just as Beijing and Washington exchanged a fresh round of retaliatory measures, reigniting trade tensions and clouding prospects for a planned bilateral summit. In response to recent US technology restrictions and forced-labor blacklists, China this week restricted exports of drones as part of a broader package of countermeasures. Even so, Beijing has signalled it wants to avoid a full breakdown in bilateral relations, with the base case among analysts still pointing to a state visit proceeding largely as planned, albeit with several potential complications still unresolved. The retaliatory exchange around tariffs and drone export restrictions adds a fresh layer of uncertainty just as a bilateral summit was being discussed.

Chinese authorities reaffirmed support for the slowing economy at a policy-setting meeting in late July, pointing to accelerated fiscal spending and timely monetary adjustments, though they stopped short of announcing concrete new steps to lift household spending. That caution comes after second-quarter GDP growth slowed to around 4.3%, its weakest pace since the fourth quarter of 2022, underscoring the extent to which exports, rather than domestic demand, continue to carry China's growth story into the third quarter.

The stronger-than-expected export print, even as growth cooled from June's pace, suggests China's manufacturing base is still finding external demand to lean on despite a soft domestic consumption backdrop and the weakest quarterly GDP growth since late 2022. Whether the momentum persists into the coming months will depend in part on whether the pre-tariff front-loading effect fades and whether AI-linked demand continues to offset headwinds from tariffs and softening global goods spending. Renewed US-China friction is a modest headwind for risk sentiment and could weigh on commodity currencies such as the Australian dollar if it escalates further.