UBS Boosts China Trade Outlook, Citing AI as Key Growth Driver

UBS has raised its full-year trade forecasts for China, citing robust demand for artificial intelligence-related products as a primary driver of surprisingly strong growth in the first half of 2026. The bank now projects China's exports will grow by 18% and imports will increase by 24% in nominal U.S. dollar terms for the year.

AI Fuels First-Half Surge

The upgraded outlook follows a powerful performance in the first six months of 2026, where China’s exports grew 18% year-over-year and imports jumped 26%, according to the UBS report. The bank noted that AI-related commerce was a critical factor, contributing nearly half of the total growth for both exports and imports during the period.

UBS analysts attribute much of this growth to rising prices rather than sheer volume, pointing to an undersupplied market and a trend toward higher-value product upgrades. A significant portion of this AI-focused trade is reportedly occurring with neighboring economies in Asia, boosting both sides of the trade ledger.

A Look Beyond AI

Outside of the technology sector, trade performance was also solid, though less spectacular. Non-AI exports rose 11% year-over-year in the first half, propelled by strong international sales of green energy products and automobiles.

Key drivers in the non-AI category included:

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• Green products: Batteries, solar equipment, and power equipment saw strong demand.
• Automotive: Shipments of electric and hybrid vehicles increased significantly.
• Commodities: Non-AI imports climbed 19%, led by price-supported purchases of gold, oil, and other raw materials.

In contrast, exports of consumer goods did not keep pace with these high-growth areas. UBS anticipates the price tailwind supporting commodity imports will likely diminish later in 2026.

Economic Implications

While the trade figures are strong, UBS projects that net exports will contribute 0.8 percentage points to China's real GDP growth in 2026. This represents a smaller contribution than the 1.6 percentage points recorded in 2025.

The bank also observed that after falling 17% over the past three years, China's export prices have begun to rebound, led by technology goods. However, import prices are rising even more rapidly, which is eroding the nation's terms of trade. Amid these dynamics, China's currency, the renminbi, has remained resilient, with the People's Bank of China allowing for its gradual appreciation.