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China’s exports grew at the fastest pace in more than a year last month, as trade remained a rare bright spot for the world’s second-largest economy despite growing tensions with Europe and the US.
Exports jumped 8.6 per cent year on year in dollar terms in June, according to data released by the National Bureau of Statistics on Friday, accelerating from 7.6 per cent in May and marking the strongest expansion since March 2023. The figure beat expectations, with a Reuters poll of analysts forecasting growth of 8 per cent.
Imports declined 2.3 per cent year on year in June, falling far short of economists’ forecast of 2.8 per cent growth and an expansion of 1.8 per cent in May.
The figures put China’s trade surplus at $99.05bn, ahead of forecasts for $85bn and marking a single-month record, according to Goldman Sachs analysts. For the first six months of the year, exports were up 3.6 per cent and imports up 2 per cent over the same period in 2023.
Policymakers in Beijing have increasingly relied on exports and manufacturing as China’s economy has grappled with weak domestic demand and a prolonged property sector slowdown. The Communist party’s leadership is preparing to convene for a closely watched economic policy conclave, which opens on Monday.
Trade partners in the US and Europe have responded to a surge of low-cost Chinese exports by strengthening trade restrictions.
The US said in May that it would sharply increase tariffs on $18bn of Chinese imports, including applying 100 per cent levies to Chinese electric vehicles, while in June the EU announced additional measures that will raise some tariffs on Chinese EVs to almost 50 per cent.
The persistently strong exports alongside relatively weaker imports pointed to a lopsided economic recovery, analysts said. China’s consumer price growth slowed in June, rising just 0.2 per cent year on year, while factory prices remained in deflationary territory for the 21st consecutive month.
Some experts have suggested that the exports activity could be driven by manufacturers front-loading shipments in an effort to avoid the US tariff increases, which come into effect in August.
Disruption to shipping routes through the Red Sea by Yemen’s Houthi militants has also driven some Chinese exporters to dispatch goods earlier in an effort to ensure delivery in time for the peak Christmas period.
“Front-loaded exports amid rising trade policy uncertainty may have also supported exports on the margin, although it is difficult to quantify its contribution,” Goldman analysts wrote in a note.
Wei Li at BNP Paribas Asset Management said the imports data was a “mixed” picture, adding that “policy fine-tuning will help maintain steady import volumes”.
In past years, the Chinese Communist party’s elite central committee has used the third plenary session to address pressing economic issues, and some observers have called for stronger measures to stimulate domestic demand and restore business and investor confidence.
But Li Qiang, China’s premier, has tempered expectations for drastic intervention, telling a World Economic Forum event last month that the country’s economy should be allowed to “gradually recover”.
Lynn Song, chief economist for greater China at ING, noted that the export growth was buoyed by shipments of cars and semiconductors, while imports were dragged lower by agricultural products and property-linked goods such as timber and steel.
“Import growth has been very much imbalanced in the year to date,” he said, adding that the US and EU tariffs could trigger a slowdown in auto exports towards the end of this year.
Analysts at Capital Economics, meanwhile, forecast that the tariffs, which cover only a small portion of Chinese goods, would have a limited impact in the short term, as exporters rerouted shipments. “Overall, we expect exports to remain a near-term tailwind to economic growth,” they wrote.
