UBS raises China trade forecasts on AI-driven growth

Investing.com -- UBS has upgraded its 2026 trade growth forecasts for China, citing artificial intelligence-related commerce as a primary factor behind the country's stronger-than-expected performance in the first half of the year.

China's exports grew 18% year-over-year in the first half of 2026, while imports increased 26%, according to UBS. The bank said AI-related trade contributed nearly half of total export and import growth during this period.

The growth has been driven more by prices than volumes, which UBS attributes to an undersupplied market and product upgrading. A large portion of China's AI trade occurs with neighboring economies in the region, supporting both imports and exports.

Beyond AI, non-AI exports rose 11% year-over-year in the first half, driven by sales of green products including batteries, solar equipment, and power equipment, as well as increased auto shipments, particularly electric vehicles and hybrid vehicles. Consumer goods exports did not match this performance.

Non-AI imports jumped 19% year-over-year, led by gold, oil, and other commodities, all supported by price increases. UBS expects this price tailwind to fade later in 2026.

The bank now forecasts exports to grow around 18% in 2026 in nominal U.S. dollar terms. UBS raised its 2026 import forecast to 24%, expecting strong AI-related exports to boost related imports, while non-AI imports may soften as commodity price growth slows.

Excluding price effects, UBS expects net exports to contribute 0.8 percentage points to real GDP growth, smaller than 1.6 percentage points in 2025.

Export prices have started to rebound in 2026 after falling 17% over the past three years, led by tech products and domestic reflation. Import prices are rising even faster, further eroding China's terms of trade.

The renminbi has remained resilient, with the People's Bank of China allowing gradual appreciation.

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