China Macro: Surge in imports should lead to further RMB strength

Research evidence excerpt

China Macro: Surge in imports should lead to further RMB strength

14 May 2026

China Macro

Figure 1: Imports growth exceeded exports in Q1 Figure 2: …driven by imports of AI-related products and

2026... upstream industrial inputs

Source: Deutsche Bank Research Source: Deutsche Bank Research

Why have imports surged? Two possibilities

Why are Chinese manufacturers suddenly importing more and re-stocking their

inventory? History suggests two possible explanations. One possibility is that

they are accumulating raw materials for future exports. The other possibility is

that they are preparing for stronger domestic demand. These two explanations

would imply different paths for future trade balance:

- If imported materials are for future exports, for example owing to global

demand for AI data centers and EVs, then the natural next step is for

exports growth to rise further. The difference between import and export

growth will narrow, and trade surplus will likely increase again.

- Alternatively, if domestic demand is the main driver for imports (such as

for domestic investment in AI and infrastructure projects), then import

growth could continue to outpace export growth for a sustained period,

and trade surplus will likely narrow further.

We tend to believe that both paths are at play simultaneously. On external

demand side, AI demand and data-center investment are still accelerating

globally, evidenced by strong semiconductor exports from neighboring

economies. China's export-order PMI is also rising, all indicating strengthening

external demand. On domestic demand side, China's fixed-asset investment has

rebounded since year-beginning, manufacturing profits have recovered, and the

real estate market has shown signs of stabilization, all creating conditions for