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Chinese customs data released on July 14 showed exports rising 27 percent from a year earlier in June to reach a record 412.39 billion dollars, the strongest performance in four months and well above the 18.2 percent gain forecast by economists. Imports jumped 36 percent to an all-time high of 286.76 billion dollars, marking a five-year peak and surpassing the 24 percent rise predicted, according to the General Administration of Customs. The figures come as factories increasingly depend on overseas sales while Beijing seeks ways to revive flagging internal demand amid a prolonged property slump.
The performance leaves China on course for an annual trade surplus exceeding 1 trillion dollars for a second consecutive year despite slowing growth in key markets and ongoing tensions with the United States. Monthly car exports topped 1 million units for the first time while the country shipped 32 billion integrated circuits, data from the customs authority indicated. Such gains in automobiles risk adding friction with trading partners including the European Union.
China’s trade surplus widened to 125.6 billion dollars in June from 105.4 billion dollars the prior month, customs figures show. The year-to-date gap stood at 575.98 billion dollars compared with 585.96 billion dollars at the same point last year even as imports have outpaced exports recently. General Administration of Customs Vice-Minister Wang Jun expressed confidence that technology shipments would support resilience in the second half despite external pressures.
A recent report by the consultancy Gavekal Dragonomics placed the ratio of annual exports to total manufacturing sales at 24 percent in the first four months of the year, the highest level since China joined the World Trade Organization in 2001. The ratio stood at 18.3 percent in 2019 and climbed to 22.3 percent last year, according to the consultancy’s assessment. That share would be notable even for a small export-oriented nation and is remarkable for the world’s second-largest economy, the Gavekal Dragonomics report stated.
Senior economist Xu Tianchen at the Economist Intelligence Unit in Beijing said continued export strength driven mostly by artificial intelligence points to a better second half when combined with more expansionary policies and lower oil prices from Middle East de-escalation. Xu Tianchen noted however that domestic demand remains a drag with retail sales staying flat and fixed asset investment turning negative last month. The phrase “China’s exports ride AI boom as domestic economy struggles” captures the contrasting forces at work in the data.
Head of China economics at Capital Economics Julian Evans-Pritchard cautioned that the strong import growth should not be read as a sign of booming domestic demand since surging semiconductor prices played a major role in lifting values. Imports from South Korea rose 85 percent year on year while those from Taiwan increased 41.1 percent, the customs data showed. China also cut oil imports to the lowest level since October 2016 and reduced year-to-date natural gas purchases by 3.4 percent, relying instead on coal where imports jumped 29 percent.
Economists polled by Reuters forecast gross domestic product growth of 4.5 percent in the April-to-June period, down from 5.0 percent in the first quarter, with the official reading due the day after the trade release. Chief economist at Pinpoint Asset Management Zhiwei Zhang said exports would likely stay strong in the second half but would add pressure on trade tensions particularly with Europe. Separate manufacturing surveys released late last month indicated overseas orders beginning to recover even as factory-gate prices continued falling.
