China’s export engine is cooling—but high-tech demand isn’t.

China's export engine experienced a slight slowdown in July, but the overall trade balance remained robust, driven by robust demand for high-tech electronics and vehicles, according to customs data released on Friday. The trade surplus narrowed to $112.5 billion from $125.6 billion in June, as exports climbed nearly 24% year-on-year, compared to a 27% increase in June.

However, imports rose by 27.5% year-on-year, slightly lower than the 36% jump seen in June. Disruptions to port operations due to typhoons contributed to the trade slowdown, although the figures were marginally better than initially anticipated.

Julian Evans-Pritchard of Capital Economics noted that while the Chinese trade boom slowed slightly in July, the bigger picture remains positive, with exports and imports still at elevated levels, fueled by soaring global demand for electronics and green technology products. The Iran war disrupted shipments of aluminum from the Middle East, resulting in increased Chinese exports of the metal.

China has successfully transitioned from a low-cost manufacturing hub to a provider of essential machinery and components for advanced manufacturing. High-tech exports surged nearly 41% from January to July compared to the same period last year, while vehicle shipments, many of them electric, jumped 55%. Electronics and machinery exports grew by 26%.

Despite rising tariffs and trade barriers in the U.S. and other countries, sustained demand for such goods helped push China's trade surplus to a record high of nearly $1.2 trillion in 2025. Following the implementation of U.S. President Donald Trump's tariffs on imports from China and numerous other nations, Chinese exports to the U.S. slowed significantly, increasing by only 2.6% year-on-year in the first seven months of the current year, while imports from the U.S. grew by 1.4%.

However, trade disputes and limits on China's access to advanced technology are expected to be significant topics during Chinese President Xi Jinping's upcoming visit to the U.S. next month.

China's leaders have adapted policies to address price wars and weak demand in key industries like automobiles, while the U.S. and other major trading partners have criticized Chinese exporters for flooding global markets due to vast excess manufacturing capacity within China. The government recently dismissed the "overcapacity" myth, citing a surge in exports of air conditioners to Europe due to the intense heat wave.

The Xinhua News Agency highlighted Europeans' growing demand for these products, emphasizing their effectiveness in addressing issues that local brands often fail to resolve. In January-July, exports to the European Union rose nearly 17%, while exports to Southeast Asia, now China's biggest trading partner, surged by 25%. China's crude oil imports decreased by 13.2% in volume during the first seven months of the year, though their value increased slightly due to higher prices.

Natural gas imports declined by 3% in volume and 1.6% in dollar terms. China's exports of strategically vital rare earths fell by 10% in volume but rose by 58% in value.