China’s exports grew fastest in five months in June, imports slowed sharply, trade surplus hit new record
China’s exports grew fastest in five months in June, imports slowed sharply, trade surplus hit new record

China’s exports grew fastest in five months in June, imports slowed sharply, trade surplus hit new record

 

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China’s exports grew at the fastest pace in five months in June as factories revved up after the lifting of COVID lockdowns, while imports slowed sharply amid sluggish domestic demand, leaving trade surplus to hit a new record high.

Exports rose 17.9% in June from a year earlier, marking the fastest pace since January, according to data released by China’s General Administration of Customs on Wednesday, accelerating from a 16.9% gain in May and much higher than expectations for a 12% rise in a Reuters survey.

Imports inched up just 1% from a year earlier, slowing from the 4.1% gain in the previous month,weighed down by the lockdown-induced slackening in commodity imports and subdued domestic consumption.

Trade surplus reached $97.9 billion in June, marking a new record high and expanding by $19.2 billion from the previous month, showed the data.

For the first half of the year, exports rose by 14.2% year over year, while imports by 5.7%, with trade surplus at $385.4 billion.

“China’s imports and exports had a steady start in the first quarter and in May and June, quickly reversed the falling trend in April,” said Li Kuiwen, a spokesperson of the customs administration, at a press conference on Wednesday.

Domestic Covid epidemic and international environment are becoming increasingly severe and complex, and China’s foreign trade is still facing some unstable factors and uncertainties, said Li.

However, the Chinese economy has strong resilience, sufficient potential and long-term healthy fundamentals, as production resumption continues, foreign trade will likely continue to see steady growth.

By regions, China’s exports to the ASEAN countries, the US and Japan grew by 29%, 19.3% and 8.2%, respectively, picking up from 25.9%, 15.7% and 3.6% growth in the previous month, showed customs data. Exports to the EU grew by 17.1% on year in June, but slowed by 3.1 percentage points from the month before.

Exports of computers, steel products and autos contributed to the robust growth. China exported 248,000 vehicles in June, up 30.5% from a year earlier.

The pickup in exports in June was mainly driven by easing of supply chain disruptions, recovery of port operations and smoothening logistics services, said Wang Qing, chief macro analyst at Golden Credit Rating International.

Industry data showed that foreign trade throughput in China’s eight largest port hubs grew by 13.8% in June from a year ago, accelerating from the 7.3% growth in the previous month.

In addition, high inflation in foreign countries continued to drive up the prices of China’s exports,Wang said.

However, economists say the strength in exports is likely to fade as rising global interest rates to rein in inflation begin to sap demand and broader economic growth.

The threat of further pandemic restrictions at home also hangs over Chinese businesses and households, while the Ukraine war has put renewed pressure on world supply chains and raised exporters’ operating costs.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said that while foreign trade continued to be the “best performing engine of the economy,” the outlook points to “a bumpy road with disruptions.”

“As the demand in the developed countries shifts towards services from goods, the strong export growth may not be sustainable in the second half of the year. The current (COVID)outbreak in Shanghai and some other cities again cast uncertainty to the economic recovery in Q3,” Zhang added.

The sharp slowdown in China’s imports points to softer domestic demand, analysts say. The country’s crude oil imports by volume fell by 10.8% in June from a year earlier, decelerating by 22.6 percentage points from the previous month, though the value of crude oil imports jumped by 43.8%, slowing by 33.8 percentage points from the month before.

Average import prices of commodities including crude oil, natural gas and coal jumped on year in the first six month, spurring the growth of import value, said Li.

Almost all of China’s commodity imports were notably weaker. Daily crude oil imports in June fell 11% from a year earlier to their lowest since July 2018, while coal imports fell 33%.

Soybean imports also fell 23% from a year earlier as high global prices curbed demand for the oilseed.