Weekly Buzz: The AI boom is also being made in China

Companies are throwing billions at AI infrastructure, and a lot of the hardware comes from China. Think networking equipment, power and cooling systems, and circuit boards. That's given the world's second-biggest economy a cushion while growth at home stays sluggish.

What’s going on here?

China's customs administration reported exports of $377 billion in May, up 19.4% from a year earlier and the fastest pace in three months. Imports grew quicker still, up 27.4% year on year. The gap left a trade surplus of $105 billion, the largest since January and above forecasts of around $92 billion.

Two things drove the export side. Demand for AI hardware kept factories busy, and pricier oil gave electric vehicles a second lift as buyers looked to skip the petrol pump. In fact, the China Association of Automobile Manufacturers reported passenger-car exports rose 73% year on year in May, with electric vehicle (EV) and hybrid shipments more than doubling.

On the import side, Chinese firms have been buying semiconductor chips in bulk to feed their own AI build-out. Beijing would rather not lean on foreign suppliers, though. Bloomberg reports that it’s drafting a plan to spend around $295 billion over five years on a national network of AI data centres, sourcing at least 80% of the technology at home and aiming for a self-reliant computing grid by 2028.

What’s the takeaway?

Strong as the trade data looks, it captures only one side of China's economy. Chinese consumers themselves were in a quieter mood: retail sales fell 0.6% year on year in May, the first decline since late 2022. Analysts describe it as China's two-tier economy, where manufacturing and export activity make up for lacklustre consumer spending. For now, China's factories are doing the heavy lifting while its shoppers stay cautious.

In Other News: The green economy crossed the $10 trillion mark

The global green economy reached a record $10 trillion in market value, according to a new report from the London Stock Exchange Group (LSEG). To arrive at the number, LSEG looked at more than 21,000 listed companies and worked out how much of each business comes from environmental products and services.

LSEG then weighted each company's market value by that green share and added the results, which gets you to $10 trillion. The revenue behind the figure, the actual money these companies earned from green products and services, grew to $5.5 trillion last year, the fastest pace since 2022, with EVs and advanced batteries standing out.

Some investors have cooled on green stocks as governments, namely the US, stepped back from climate policy. That stance misses a bigger point: the clean energy transition now runs as much on energy security and economic competitiveness as it does on climate goals. For context, the S&P Global Clean Energy Transition Index has risen more than 80% since the end of 2024, more than double the S&P 500's return over the same period.

Wind and solar are the cheapest sources of new electricity in many regions, so building clean has become the economical choice. Energy security adds to the case, a point the US-Iran conflict made plain. Long-term investors will recognise the principle: a diversified grid pulls from many sources, including hydro, solar, wind, nuclear, oil, and gas, so when one falters, the rest carry the load.

(For a portfolio that’s built around the clean energy transition, check out Thematic Portfolios.)

These articles were written in collaboration with Finimize.