CITIC Securities: It is expected that the export growth rate in the first quarter of this year will reach approximately 17%.

CITIC Securities Research Report states that in the first two months of this year, export growth significantly exceeded expectations and previous values, mainly driven by strong resilience in non-US exports, the “grab export” window created by adjustments to export tax rebate policies, and the low base effect from the same period last year. In terms of product structure, the semiconductor industry chain and automotive industry chain have played a major role in boosting exports, while labor-intensive products have shifted from negative to positive contribution to overall exports. Imports also grew sharply beyond expectations in the first two months, primarily due to the recovery in the semiconductor sector driving increased demand across related industrial chains, although the growth rate of most bulk commodity imports declined. The U.S. Supreme Court ruling that Trump’s IEEPA tariffs are illegal has eased external tariff pressures. Coupled with the resilience of non-US exports, CITIC Securities predicts China’s exports will still perform well in 2026. Under a neutral scenario, it is expected that the export growth rate in the first quarter could reach around 17%.

Full Text:

Imports and Exports | Multiple Factors Resonating, Foreign Trade Shows a “Good Start” (January-February 2026)

In the first two months of this year, export growth significantly outperformed expectations and previous figures, mainly due to strong resilience in non-US exports, the “grab export” window created by adjustments to export tax rebate policies, and the low base effect from the same period last year. The product structure shows that the semiconductor industry chain and automotive industry chain have had a substantial impact on boosting exports, while labor-intensive products have shifted from negative to positive contribution to overall exports.

Exports in January-February 2026 increased by 21.8% year-on-year (compared to an expected 7.3% increase according to Wind consensus), with December 2025 showing a 6.6% increase. Imports grew by 19.8% year-on-year (expected 6.9%), with December up 5.7%. The trade surplus was $213.62 billion, a 26.3% increase year-on-year. We offer the following comments:

Factors:

In January-February 2026, China’s exports grew by 21.8% year-on-year, up 15.2 percentage points from December 2025, and 14.5 percentage points higher than the Wind consensus. Exports to the U.S. declined by 11.0%, with a significant narrowing of the decline.

Regarding non-US trading partners, exports to the EU, ASEAN, Latin America, Africa, and Russia increased by 27.8%, 29.2%, 16.4%, 49.8%, and 22.3%, respectively, with changes from previous values of 16.1, 18.0, 6.6, 28.0, and 18.7 percentage points. Our estimates show that overall exports to non-US regions grew by 27.1% year-on-year in January-February, 14.3 percentage points higher than December 2025. Notably, exports to Africa nearly doubled expectations, driven by low last year’s base (-0.2%) and China’s increasing manufacturing competitiveness, expanding trade relations with Africa, and ongoing industrialization needs.

The export tax rebate adjustment on January 9, 2026, also contributed to the “grab export” window. Although the General Administration of Customs has not yet released data for photovoltaic and battery exports for January-February, Sina Finance reports that China’s power battery exports increased by 59% year-on-year in January 2026. The low base effect also contributed to the above-expectation growth, as the same period in 2025 only saw a 2.1% increase, down 8-9 percentage points from December 2024.

Looking at the export product structure, according to customs data, in January-February 2026, exports of integrated circuits, automobiles (including chassis), and ships grew rapidly, with increases of 72.6%, 67.1%, and 52.5%, respectively. Our estimates indicate that the semiconductor and automotive industry chains contributed the most to export growth, adding 4.7 and 2.4 percentage points, respectively. The strong performance of the semiconductor industry chain may be related to the global recovery since 2025, driven by exploding AI computing demands. Among representative labor-intensive products, exports of furniture, shoes, clothing, bags, and toys all rebounded compared to previous levels, turning labor-intensive products from negative to positive contributors to overall exports.

Imports also grew sharply beyond expectations, mainly due to the recovery in the semiconductor sector boosting related industrial chain demand, while most bulk commodities saw a slowdown in import volume growth.

Imports in January-February 2026 increased by 19.8% year-on-year, 14.1 percentage points higher than previous data, significantly surpassing market expectations and outperforming manufacturing sector performance. Manufacturing PMI in January and February was 49.3% and 49.0%, respectively, slightly lower than December 2025 (50.1%), indicating a weaker manufacturing outlook after seasonal adjustments.

In specific categories, the main driver of the import rebound was the semiconductor industry chain. Imports of automatic data processing equipment and parts, and integrated circuits increased by 50.5 and 23.2 percentage points, respectively. Among bulk commodities, imports of copper ore, crude oil, coal, and natural gas slowed down compared to previous levels, while iron ore imports increased.

By country, most major trade partners saw an increase in import growth in January-February, though imports from the U.S. still declined significantly. Imports from the U.S., EU, ASEAN, Latin America, Africa, and Russia grew by -26.8%, 11.8%, 13.0%, 30.3%, 16.2%, and 5.2%, respectively, with changes from previous values of 1.9, -6.0, 18.3, 3.8, 9.9, and -13.7 percentage points.

The U.S. Supreme Court ruling that Trump’s IEEPA tariffs are illegal has eased external tariff pressures. Coupled with the resilience of non-US exports, we believe China’s exports will still perform well in 2026. Under a neutral scenario, the first quarter’s export growth could reach about 17%.

On February 21, the U.S. Supreme Court ruled that the IEEPA does not authorize the President to impose large-scale tariffs. For China, this may lead to a reduction in overall U.S. tariffs, especially during the low-tariff window, potentially benefiting China’s foreign trade exports.

Our estimates show that in January-February 2026, the EU, ASEAN, Africa, and Latin America accounted for 15.4%, 17.2%, 6.5%, and 7.5% of China’s exports, respectively, with the EU and Africa increasing their shares by 0.5 percentage points each compared to 2025. The U.S. share was only 10.2%, down 0.9 percentage points from 2025. We believe that, apart from ASEAN, China’s exports to other non-US regions are mainly driven by local demand, with key areas like Africa strengthening trade ties under the Belt and Road Initiative. Overall, China’s exports to non-US trade partners are expected to remain strong this year.

Regarding the first quarter, based on historical impacts of export tax rebate adjustments, we believe the “grab export” window created by the January 9 tax rebate adjustment will support exports into March 2026. We expect March exports to remain at a relatively high level but anticipate some slowdown compared to the first two months due to base effects. Under a neutral scenario, we estimate the first quarter’s export growth could reach about 17%.

Bond Market Strategy:

In January-February 2026, China’s exports achieved double-digit growth, far exceeding market expectations. Following the release of this data, the yield on the 10-year government bond rose. Historically, China’s bond market has been relatively domestically driven, with the impact of overseas risk appetite or liquidity changes being more indirect under a loose monetary policy environment. Therefore, in the short term, bonds may see a relative increase in attractiveness amid geopolitical risks affecting risk assets.

Risk Factors:

• External demand recovery falling short of expectations
• Deterioration of geopolitical risks
• Unexpected increases in overseas tariffs
• Unexpected domestic monetary policy changes
• Domestic demand recovery weaker than expected

(Source: Yicai)