world-economy

China's Trade Surge Masks Uneven Global Recovery as AI Demand Reshapes Supply Chains

China's exports and imports expanded faster than expected in May, driven by surging demand for artificial intelligence hardware that is reshaping global trade flows. The performance offers a sharp contrast to weakness elsewhere in Asia. Japan, South Korea and Taiwan face industrial headwinds despite modest growth in some sectors. South Korea's economy expanded faster than initially estimated early in the year, buoyed by AI-related shipments. Geopolitical tensions including past conflicts continue to disrupt logistics networks, particularly affecting routes through the Persian Gulf. Germany faces mounting pressure as Chinese import demand softens while U.S. tariff threats loom, leaving policymakers with limited policy alternatives. The divergence highlights how AI-driven demand concentrates gains among select exporters while broader economic momentum remains fragile across developed markets.