China’s exports top forecasts but falling imports point to more stimulus

The mixed trade data keeps alive calls for further government stimulus as the US$18.6 trillion economy struggles to get back on its feet. — Reuters

BEIJING: China’s exports grew at their fastest in 15 months in June, suggesting manufacturers are front-loading orders ahead of tariffs expected from a growing number of trade partners, while imports unexpectedly shrank amid weak domestic demand.

The mixed trade data keeps alive calls for further government stimulus as the US$18.6 trillion economy struggles to get back on its feet.

Analysts warn that the jury is still out on whether strong export sales in recent months can be sustained given major trade partners are becoming more protective.

“This reflects the economic condition in China, with weak domestic demand and strong production capacity relying on exports,” said Pinpoint Asset Management chief economist Zhiwei Zhang.

“The sustainability of strong exports is a major risk for China’s economy in the second half of the year. The economy in the United States is weakening. Trade conflicts are getting worse.”

Outbound shipments from the world’s second-biggest economy grew 8.6% year-on-year in value in June, customs data showed yesterday, beating a forecast 8% increase in a Reuters poll of economists and a 7.6% rise in May.

But imports hit a four-month low, shrinking 2.3% compared with a forecast 2.8% increase and a 1.8% rise the previous month, highlighting the fragility of domestic consumption.

Stronger-than-expected exports have been one of the few bright spots for an economy otherwise struggling for momentum despite official efforts to stimulate domestic demand following the pandemic.

A prolonged property slump and worries about jobs and wages are weighing heavily on consumer confidence.

Still, as the number of countries stepping up curbs on Chinese goods increases, so too does the pressure on its exports to prop up progress towards the government’s economic growth target for this year of around 5%.

China’s trade surplus stood at US$99.05bil in June, the highest in records going back to 1981, compared with a forecast of US$85bil and US$82.62bil in May.

The United States has repeatedly highlighted the surplus as evidence of one-sided trade favouring the Chinese economy.

Washington in May hiked tariffs on an array of Chinese imports, including quadrupling duties on Chinese electric vehicles (EVs) to 100%. — Reuters