Growth in China’s Trade Rebounds with Increase in Imports of AI Equipment

China’s Imports of AI Equipment Surge, Driving Return to Trade Growth

China’s imports of critical equipment for developing artificial intelligence have surged this year, according to official data released on Thursday. The value of China’s imports of automatic data processing equipment, including computers and their components, increased by 50% year on year in the first four months of 2024. Additionally, imports of computer chips and other high-tech products recorded double-digit gains from the same period last year.

This boom in AI equipment purchases has helped Chinese trade return to growth in dollar terms in April, following declines in the previous month. The value of imports expanded by 8.4% in dollar terms in April compared to a year earlier, beating analysts’ expectations. Exports also saw growth, rising by 1.5%.

Analysts attribute this growth to China’s focus on competing in the global AI race. The country’s government is leaning on a manufacturing revival, particularly in high-tech industries, to boost economic growth. Policymakers have set a target of 5% growth for 2024, but analysts have warned that achieving it may be ambitious.

In the AI sector, China has implemented tax breaks and subsidies to encourage growth, but domestic technology companies have faced challenges due to increasing restrictions on technology exports from the US and its allies. Economists have called on Beijing to do more to boost consumer and investor confidence through direct stimulus measures.

The return to positive trade growth may also reflect global demand, with HSBC analysts noting “some green shoots” in the economy. Despite geopolitical tensions and challenges, China’s focus on AI development and high-tech manufacturing is driving its trade growth and economic strategy.