China’s foreign trade has begun the year with unusual vigour. In the first two months alone, the country’s trade in goods returns to the “double digit era”, recording a 18.3% surge year-on-year. Imports reached 3.11 trillion yuan, up 17.1%, China Economic Net reported on Thursday.

A defining feature of China’s latest trade boom is diversification. In the first two months of the year, total trade between China and the Association of Southeast Asian Nations (ASEAN) reached 1.24 trillion yuan, up 20.3%.

Trade with the European Union climbed 19.9% to 998.9 billion yuan. Commerce with Belt and Road countries rose 20% to 4.02 trillion yuan.

“Robust global demand is certainly something we shouldn’t neglect. South Korea and Vietnam, saw double-digit export growth as well,” Tianchen Xu, Senior Economist from the Economist Intelligence Unit told China Economic Net.

Behind the headline figures lies a shift in the composition of exports. High-tech products exported from China rose 26.9% in the first two months of the year.

Mechanical and electrical goods—long the backbone of the country’s export sector—reached 2.89 trillion yuan, increasing 24.3% and accounting for a growing share of overall shipments.

Robotics illustrates the trend. In 2025 Chinese-made intelligent handling robots and welding robots were widely deployed in overseas infrastructure and transport projects, with export growth exceeding 60%.

Optical transceiver modules used in high-end graphics processors—critical for data centres and artificial-intelligence workloads—also recorded export growth approaching 60%.

China is also supplying hardware for the world’s expanding digital infrastructure. Exports of large transformers, energy-storage batteries and other electrical equipment rose 18.8%, reflecting booming demand from global data centres and energy systems.

“China is among the largest importers of iron ore, copper and crude oil, and robust exports feeds into import demand as well,” Xu observed.

Increasingly, the country’s imports mirror its technological ambitions. Rapid development in autonomous driving has driven lidar imports up by more than 20%, while demand for artificial-intelligence computing power lifted computer component imports by 20%.

In the first two months of this year, imports of mechanical and electrical products reached 1.21 trillion yuan, up 21.3%, pushed by strong demand for electronic components and computer parts that support industrial upgrading.

Commodity imports remain steady as well. China imported 210 million tonnes of iron ore, up 10%, and 96.9 million tonnes of crude oil, an increase of 15.8%.

This pattern—importing raw materials and intermediate inputs while exporting industrial goods—has become a hallmark of China’s economic ties with other developing economies, providing resource exporters in the Global South with a reliable market while supplying them with affordable manufactured products, lowering the costs of industrialisation.

According to China’s Ministry of Commerce, China’s imports from more than 130 countries and regions recorded growth in 2025, while the country became a major export destination for nearly 80 economies worldwide.

Trade flows are also reshaping the global financial landscape. Data from China’s State Administration of Foreign Exchange show that cross-border yuan settlements rose by 24.8% last year. The currency’s share in China’s cross-border trade payments has climbed from 16% in 2020 to nearly 30% in 2025.

The world’s laboratory: International businesses with operations in China are feeling the momentum more directly. Foreign-invested enterprises recorded 2.2 trillion yuan in imports and exports in the first two months of the year, an increase of 15.3%.

In 2025, China established 70,392 new foreign-funded firms, up 19.1% from the previous year, with strong inflows into e-commerce services, medical equipment manufacturing and aerospace industries.

“It’s something I’d call “world factory 2.0”. Its advantage lies in cost-effectiveness, supply chain readiness and engineering expertise,” Xu said.

A recent report by KPMG found that 94% of multinational companies plan to maintain investment in China, with 67% expressing moderate or strong confidence in market growth over the next three to five years.

Oliver Oehms, Executive Director and Board Member of the German Chamber of Commerce in China - North China talked about further investment plans of German companies in China: “Some 5,000 German companies are operating in China across several industries.

We see the commitment of German investment and companies in China in our annual business confidence survey. The latest version shows that more than 50% have further plans to invest in China.” he told China Economic Net.

Even for American firms, China is an indispensable partner. A recent business climate report by the American Chamber of Commerce in China found that 72% of surveyed firms believe their industry will continue to grow.

More than half list China among their top three global investment destinations, and 71% say they are not considering relocating production or sourcing outside the country.

An efficient, productive innovation ecosystem is increasingly central to China’s appeal. R&D spending has risen steadily by around 10% annually over the past five years.

According to the World Intellectual Property Organization’s Global Innovation Index 2025, China now ranks first in the number of top-tier innovation clusters, with 24 among the world’s leading 100.

Data from China’s Ministry of Commerce show that newly established foreign-invested enterprises nationwide rose a robust 25.5% year-on-year in January, with actual foreign investment in R&D and design services surging 175.1%.

For many multinational firms, China is no longer just a manufacturing base: it has become a place to develop, test and scale the next generation of products—from advanced industrial machinery to digital and green technologies—cementing its role as the world’s laboratory of innovation.

Credit: Independent News Pakistan (INP) — Pak-China