According to Standard Chartered economists Hunter Chan and Shuang Ding, China's import prices have been rising year-on-year since September 2025, with both industrial purchase prices and the Producer Price Index (PPI) turning positive in March and experiencing further increases in April and May. This marks the end of a deflationary period that lasted for more than three years. The main drivers behind these price increases are higher upstream metal prices, increased electronic product prices due to global AI demand, and elevated petrol-related prices amid the Middle East conflict [1].
Despite these import cost pressures, China's export prices have risen more slowly than import prices and those of key trading partners. The official export price index reached a near three-year high in April, which has raised concerns about China potentially exporting inflation. However, the rise in export prices has consistently lagged behind import prices in both timing and magnitude, suggesting that China continues to act as a disinflationary force in the global economy. The cost pass-through is mainly concentrated in upstream sectors, with PPI inflation being much softer in manufacturing than in mining and raw materials, and consumer goods PPI still in deflation [1].
China's overall export price growth has also lagged that of its key trading partners, further indicating its role in mitigating global inflation. An exception is seen in integrated circuit (IC) export prices, which have outpaced IC import prices amid the global AI investment boom. The current cost-driven reflation is expected to be more moderate compared to the 2021-22 period, as the present environment lacks the ultra-low base effect from COVID disruptions and domestic demand remains softer, as evidenced by declining manufacturing capacity utilisation rates [1].
CONCLUSION
China's export prices are rising but continue to lag behind import prices and those of key trading partners, maintaining its role as a disinflationary force globally. While upstream cost pressures are evident, the overall impact on global inflation is likely to be milder than in previous reflation periods. Market participants should monitor sector-specific trends, particularly in integrated circuits, but broad-based inflationary risks from Chinese exports remain limited.