China exports are getting costlier — and the oil shock, AI boom are partly to blame

China’s export prices rose 5% year-on-year in April, ending a three-year decline, according to data from the General Administration of Customs. The increase was driven by a 22% jump in mineral fuel exports, including petroleum oil, and a surge in electronics and electrical machinery prices—up over 20%—fueled by AI-driven demand for semiconductors and high-performance computing equipment. The AI boom has reshaped global trade, with the Netherlands Bureau for Economic Policy Analysis (CPB) reporting a 3.5% rise in global goods trade volume in Q1 2026. China’s exports grew 11.3% quarter-on-quarter, while U.S. imports jumped 6.3%, reflecting heavy American investment in AI infrastructure. A United Nations report highlighted increased trade in servers, semiconductors, and automation components, primarily manufactured in Asia. Rising copper prices—reaching record highs—further pressured export costs for metal-intensive goods. Fertilizer prices also climbed 17%, linked to natural gas costs. The surge contrasts with stagnant or falling prices for traditional Chinese exports like rubber, textiles, and plastics, where overcapacity limits price hikes. For years, China’s low-cost manufacturing helped curb global inflation, but the reversal could complicate inflation outlooks, especially in the U.S. Economists warn that uneven price gains may squeeze profit margins for Chinese manufacturers, weakening domestic demand. Meanwhile, geopolitical tensions, including conflicts in West Asia, add uncertainty to trade recovery prospects.