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Shenwan Hongyuan: AI-related goods contributed about half of China's import growth in Jan-Aug
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A research report from Shenwan Hongyuan Securities analyzes the sharp increase in China's imports in the first eight months of the year. The report finds that AI-related imports contributed approximately 50% of total import growth, driven by the global AI revolution which boosted China's AI exports and, in turn, demand for imported semiconductor equipment and data processing components. However, the report notes a shift from volume-driven to price-driven AI import growth since April. Beyond AI, non-AI production materials (energy, metals, chemicals) and consumer goods (jewelry and precious metals) also supported import growth, contributing 5.2 and 6.7 percentage points respectively. The increase in energy imports is attributed to rising oil prices, while precious metal imports are linked to a domestic gold speculation frenzy rather than consumer spending. The report concludes that 60% of the import surge stems from the AI revolution and 40% from fluctuations in oil and gold prices.
Source report
Since the beginning of the year, China's import growth has accelerated significantly. This article examines the composition of China's imports, the contribution of AI-related goods to the import surge, and other key drivers beyond AI.
1. What Goods Is China Importing?
China's imports are dominated by producer goods, with imports from developed economies consisting mainly of capital goods, and those from emerging economies consisting mainly of intermediate goods.
Product Structure
Imports are primarily production-related, ranked by share as follows:
- Non-AI producer goods: 52.1%
- AI-related producer goods: 29.0%
- Other consumer goods
- Jewelry and precious metals
Within AI-related producer goods, semiconductor devices and data processing equipment parts account for a high share. Within non-AI producer goods, metals and energy dominate. Among consumer goods, precious metals and jewelry and food are the largest categories.
Regional Structure
- Emerging economies: Account for 70% of imports, primarily intermediate goods (78.8%), including AI-related goods, crude oil, and minerals. Capital goods account for only 6.2%.
- Developed economies: Account for 30% of imports, with a higher share of capital goods (31.8%), including AI equipment, machinery, and chemicals—high-end manufacturing products.
End-Use Structure
Imports are used for:
- Export: 55.2%
- Investment: 23.4%
- Consumption: 21.4%
However, domestic-demand-driven imports are not linked to total consumption or investment. Consumer imports are mainly gold and food, tied only to related demand. Investment imports are primarily non-ferrous metals used in electronics production, linked to equipment investment.
2. How Much Does AI Contribute to the Import Surge?
From January to August 2024, AI-related imports contributed approximately 50% of total import growth.
The transmission chain is: Global AI revolution → Boost to China's AI exports → Corresponding increase in AI imports.
- AI-related producer goods contributed 13.8 percentage points to total import growth.
- The global AI revolution drove China's AI exports, and since China's AI industry is primarily engaged in processing and assembly, increased processing demand led to a sharp rise in imports of semiconductor equipment and data processing equipment parts.
Changing Price-Volume Dynamics
- Q1 2024: AI import growth was driven mainly by volume, which accounted for 97% of the increase.
- Since April: The price-volume relationship shifted. Price growth surged by 40.7 percentage points to 41.7%, while volume growth fell by 16.5 percentage points to 19.1%.
Regional Impact
The surge in imports from South Korea, ASEAN, and India is also linked to AI:
- South Korea: +4.6 percentage points contribution to total import growth
- ASEAN: +4.4 percentage points
For example, over 90% of import growth from South Korea came from AI-related producer goods, with ASEAN showing a similar pattern.
3. What Else Is Driving Import Growth?
Beyond AI, non-AI producer goods and precious metals are also key contributors.
Non-AI Producer Goods
From January to August, non-AI producer goods contributed 5.2 percentage points to total import growth, with the following subcategories:
- Energy: +0.5 percentage points
- Metal ores and metal products: +3.6 percentage points
- Pharmaceuticals and chemicals: +0.7 percentage points
Energy imports rose mainly due to higher oil prices (price growth up 25.2 percentage points to 12.0%), while import volumes fell 19.5 percentage points to -15.5%. Metal imports were driven over 70% by copper and AI-related metals, consistent with rising domestic electronics production and equipment investment.
Consumer Goods: Jewelry and Precious Metals
Consumer goods import growth was driven over 80% by precious metals and jewelry, reflecting a gold speculation boom rather than stronger domestic consumption.
- Historically, precious metal imports tracked retail sales of related goods.
- In 2024, precious metal imports have far outpaced retail sales growth, suggesting that companies are importing gold directly for speculative purposes, bypassing retail channels.
Summary
The 2024 import surge can be attributed to:
- 60%: Global AI revolution
- Direct effect: AI product imports (+13.8 percentage points)
- Indirect effect: Domestic equipment investment and non-ferrous metal imports (+2.6 percentage points)
- Total AI contribution: +16.4 percentage points
- 40%: Price fluctuations in oil and gold
- Energy, gold and jewelry, and chemicals imports rose due to geopolitical tensions in the Middle East and gold price volatility.
Source
上海申银万国证券研究所有限公司Eastern
Part of this Story
AI revolution drives 60% of China's import surge, oil and gold add 40%