China: AI exports boom and muted FX impact – Societe Generale

Societe Generale economists describe China’s June trade surplus of $125.62bn, driven by 27% yoy export growth and 36% import growth, with AI-related high-tech shipments up over 50%. The report compares similar dynamics in Korea and Taiwan, where large tech-driven surpluses are recycled into foreign assets, limiting currency appreciation, domestic demand spillovers and broader inflation despite strong nominal GDP gains.

AI-driven trade and currencies

"China’s trade surplus widened to $125.62bn in June, the second largest on record, as exports expanded 27% yoy and imports rose 36% yoy."

"The trade data reinforces the divergence our economists have highlighted between robust tech-driven external demand and still-subdued domestic consumption."

"The similar AI-driven trade dynamic is playing out in Korea and Taiwan, where surging semiconductor and technology demand are driving the exports boom, corporate profits and nominal GDP growth."

"However, as our economists highlight, the transmission to broader inflation, domestic demand and currency appreciation has been far more muted."

"As a result, much of the AI-driven income gains are retained or invested abroad."