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China trade surplus surges to record as exports accelerate

BEIJING (AP) – China’s monthly trade surplus soared to a record USD97.9 billion in June as export growth picked up after anti-virus controls that shut down Shanghai were lifted and shippers moved a backlog of cargo.

Exports rose 17.9 per cent over a year ago to USD331.2 billion, up from May’s 16.9 per cent growth, customs data showed yesterday.

In a sign of Chinese economic weakness, imports rose just one per cent to USD233.3 billion, pushing up the trade surplus by 90 per cent from a year ago.

Imports from Russia, mostly oil and gas, rose 56 per cent over a year ago as Beijing took advantage of price cuts offered by the Kremlin after Washington and Europe suspended most of their own purchases to punish Moscow for its invasion of Ukraine.

China’s trade already was depressed by weak global demand before Shanghai, site of the world’s busiest port, and other cities shut down starting in late March. Cargo handling is back to normal, but economists warn the shock will be felt abroad for months.

“Exports rebounded strongly as shipping bottlenecks eased,” said Julian Evans-Pritchard of Capital Economics in a report. “But we think this may be the last hurrah for China’s pandemic export boom before shipments drop back on cooling demand.”

Weak import demand reflects a slump in construction, a major customer for foreign iron ore and other raw materials, after the government launched a crackdown on debt that has chilled the vast real estate industry.

Cars and trucks for export at a port in Yantai in eastern China’s Shandong Province. PHOTO: AP

Forecasters have cut estimates for China’s economic growth to as low as two per cent this year, well below the ruling Communist Party’s target of 5.5 per cent.

China’s economy grew by a weak 4.8 per cent over a year earlier in the quarter ending in March. That was an improvement over the four per cent rate in the final three months of 2021.

Some believe it shrank in the quarter ending in June before beginning a gradual recovery.

Surveys show that might be under way as manufacturing and service activity accelerates.

If that lasts, “the outlook for the second half of 2022 is for stronger imports”, Rajiv Biswas of S&P Global Market Intelligence said in a report.

Exports to the United States (US) surged 19.3 per cent over a year earlier to USD56 billion despite lingering tariff hikes in a trade war over Beijing’s technology ambitions. Imports of American goods edged up 1.7 per cent to USD14.6 billion.

China’s politically volatile trade surplus with the US widened by 26 per cent from a year earlier to USD41.4 billion. It was among irritants that prompted then-president Donald Trump to launch the trade fight and hike import taxes.

Envoys from the two governments have talked by phone and video link but have yet to announce a date to resume face-to-face negotiations.

Exports to the 27-nation European Union rose 17.1 per cent from last June to USD50.5 billion, while imports of European goods climbed 9.7 per cent to USD25 billion.

China’s trade surplus with Europe widened by 65 per cent to USD25.4 billion.

Imports from Russia rose 56 per cent over a year ago to USD9.7 billion. China’s growing purchases of Russian energy are irritating Washington and its allies but don’t violate sanctions on Moscow.

Beijing declared ahead of the attack that it had a “no limits” friendship with Moscow. It criticises the sanctions but has avoided helping Putin for fear of losing access to Western markets and the global banking system.

The Biden administration last month accused five Chinese companies of dealing with the Russian military before the February 24 invasion. They added them to a trade blacklist but officials did not say if they were accused of supplying goods after the attack.

Last year, China bought 20 per cent of Russian crude exports, according to the International Energy Agency.