China’s export growth unexpectedly picked up speed in July, offering an encouraging boost to the economy as its struggles to recover from a COVID-induced slump, but weakening global demand could start to drag on shipments in coming months.
Exports grew 18.0 percent in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, compared with a 17.9 percent rise in June and beating analysts’ expectations for a 15.0 percent gain.
Exports have been one of the few bright spots for the Chinese economy in 2022, as widespread lockdowns hit businesses and consumers hard and the once mighty property market lurches from crisis to crisis.
“China’s export growth surprised again on the upside. (It) continues to help China’s economy in a difficult year as domestic demand remains sluggish,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
However, many analysts have expected shipments to fade amid cooling global consumption.
A global factory survey released last week showed demand weakened in July, with orders and output indexes falling to their weakest levels since the onset of the COVID-19 pandemic in early 2020.
China’s official manufacturing survey indicated activity contracted last month, raising fears that the economy’s recovery from lockdowns in spring will be slower and bumpier than expected.
But there were signs that transport and supply chain disruptions caused by COVID restrictions were continuing to ease, just in time for shippers preparing for peak year-end shopping demand.
Foreign trade container throughput at eight major Chinese ports rose 14.5 percent in July, speeding up from the 8.4 percent gain in June, according to data released by the domestic port association.
Container throughput at COVID-hit Shanghai port hit a record high in July.
July exports may also have been buoyed by pent-up demand from Southeast Asia as supply snarls eased and factories there ramped up production, Bruce Pang, chief economist and head ofresearch at Jones Lang Lasalle Inc, said in a research note.
Moreover, amid surging inflation, some European and US customers may have frontloaded orders heading into the holiday season to ensure they had goods on hand, he added.
Still, while export growth remained high, mainly backed by price factors, the volume of exported goods dropped in July, said Chang Ran, a senior analyst at Zhixin Investment Research Institute.
“Looking ahead in the second half of the year, exports are expected to be resilient in the short run, but weakening external demand may pressure them in the fourth quarter,” Chang said.
Imports still tepid
After a shaky second quarter, most analysts have expected China’s import momentum to pick up modestly in the latter half of the year, supported by construction-related equipment and commodities as the government ramps up infrastructure spending.
But imports last month were again weaker than expected, suggesting domestic demand remains soft.
Imports rose 2.3% from a year earlier, compared with June’s 1 percent gain and missing a forecast of a 3.7 percent rise.
“Despite an uptick in domestic demand amid loosening COVID control measures, the weak performance of the production side dragged on imports,” said Xu Shuzheng, a researcher at CITIC Securities, adding that fresh COVID flare-ups could hinder the economy’s recovery.
Crude oil imports in July fell 9.5 percent from a year earlier as fuel demand recovered more slowly than expected due to virus outbreaks.
The volume of imported integrated circuits -- a major Chinese import -- also dropped 19.6 percent in July from a year earlier, according to Reuters’ calculations.
That may be an additional red flag for exports, as a significant amount of the country’s imports are components for goods that are then re-exported.
China posted a record $101.26 billion trade surplus last month, well above the $90.0 billion surplus analysts had expected.
The country’s top economic planner said last week that the economy is in the “critical window” of stabilization and recovery, and the third quarter is “vital.”
Top leaders recently signaled they were prepared to miss the government growth target of around 5.5 percent for 2022, which analysts said had been looking increasingly unattainable after the economy narrowly avoided contracting in the second quarter.
The International Monetary Fund in late July sharply cut its 2022 growth forecast for China to 3.3 percent from 4.4 percent in April, citing COVID lockdowns and the worsening crisis in the country’s property sector.
China monthly trade surplus surges to record $97.9 bln as exports accelerateChina’s monthly trade surplus soared to a record $97.9 billion in June as export growth accelerated following the easing of anti-virus controls that ... Economy
Zero progress on China trade sanctions says AustraliaAustralia vowed Saturday to stand up for itself in dealing with China, after reporting no breakthroughs in high-level talks where it pressed Beijing ... World News
China endorses Afghanistan for trade, investment after deadly earthquakeChina’s ambassador touted trade and investment plans for Afghanistan on Tuesday, a public endorsement for doing business in the Taliban-controlled ... World News
China accuses G7 of ‘creating division’ over trade criticismChina accused the Group of Seven countries on Wednesday of irresponsibly sowing division after the forum condemned Beijing's trade practices in an end ... World News
China’s exports surge in May as easing COVID curbs rev up trade, help boost suppliesChina’s exports grew at a double-digit pace in May, shattering expectations in an encouraging sign for the world’s second biggest economy, as ... Economy
China says ‘firmly’ opposes US trade initiative with TaiwanChina “firmly” opposes a new trade initiative between Taiwan and the United States, the Commerce Ministry said on Thursday, a plan the government in ... World News
China-Swiss trade talks stall over rights issues: Media reportsEfforts by Switzerland to refresh its free trade agreement with China have stalled as Bern takes a more critical view of Beijing’s human rights record ... Economy
China offers South Pacific free trade, security agreements: DocumentsChina has put forward plans to dramatically expand security and economic cooperation with South Pacific nations, with one regional leader calling it a ... World News
Russia expects trade with China to reach $200 billion by 2024: ReportRussia said on Saturday it expected commodity flows with China to grow and trade with Beijing to reach $200 billion by 2024, as Moscow faces mounting ... Economy
China’s Jan-March overall trade with Russia rises 28 percent to $38.2 blnChina’s overall trade with Russia rose to 243.03 billion yuan ($38.18 billion) in January-March, a Chinese customs spokesman said on Wednesday, up ... World News
Germany minister warns against heavy reliance on China tradeGerman Finance Minister Christian Lindner voiced concern Wednesday over his country’s heavy reliance on trade with China, saying Europe's top economy ... World News