China exports see unexpected spike in July, imports down

BEIJING (AFP) – China saw another surprise jump in exports last month as the global economy slowly re-opened after virus lockdowns, data showed yesterday, but there were warnings that while the country is expected to get back on track by year’s end overseas shipments would likely struggle.

The readings, however, showed an unexpected fall in imports, highlighting the battle leaders have in stoking domestic demand as a key driver of national growth.

Exports rose 7.2 per cent in July, customs data showed, smashing forecasts in a Bloomberg survey for a 0.7 per cent drop. The figure was also a massive jump from the 0.5 per cent increase in June, which beat expectations as well.

Analysts had warned that a spike in global infections – forcing new containment measures in some countries – and weakened external demand could weigh on China’s recovery, with the boost from healthcare shipments fading.

Imports fell 1.4 per cent, confounding a 0.9 per cent rise tipped by analysts.

China’s economy contracted 6.8 per cent in the first quarter as lockdowns around the country to prevent the coronavirus spreading brought businesses and activity to a near standstill.

But success in containing the disease domestically and the easing of measures helped it rebound rapidly in the following three months.

A China COSCO Shipping container ship sails past the skyline of Qingdao in eastern China’s Shandong Province. PHOTO: AP

Analysts told AFP that while there are signs of demand recovery, China’s export data could still be “rocky” in the coming months.

ING Chief Economist for Greater China Iris Pang said the broad uptick of exports – beyond a medical supplies boost – suggested that external demand has started to recover.

The weakness in imports, she said, could be down to a drop in crude oil shipments given prices have risen and China had earlier piled up inventory.

Chief China Economist of Nomura Lu Ting expects “decent export growth” to extend for another one to two months, but cautioned some factors behind the trend “might not be sustainable”.

“As some countries gradually reopen their economies and start producing personal protective equipment domestically for security reasons, China’s exports of those products could decline,” said Lu.

Yesterday’s data also showed China’s trade surplus with the United States (US) rose 16 per cent on-year to USD32.456 billion in July.

This year, tensions between the two have soared on a number of fronts, including trade, military, and China’s handling of the coronavirus pandemic.

Head of Greater China Research at OCBC Bank Tommy Xie told AFP exports to the US were strong in July, suggesting growth could also be from “frontloading activity due to concerns about the worsening relationship between the US and China”.