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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.
Policymakers in Beijing have increasingly relied on exports and manufacturing to drive growth, as China’s economy grapples with weak domestic demand and a prolonged property sector slowdown, and ahead of a Communist party economic policy conclave, which opens on Monday.
But trade partners in the US and Europe have responded to a surge of low-cost Chinese exports by strengthening trade restrictions.
In May, the US said 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.
Analysts have suggested that the increase in Chinese exports in recent months could be driven by manufacturers front-loading shipments in an effort to avoid expected tariff increases in the US, which will come into effect in August.
Disruption to shipping routes through the Red Sea due to attacks 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.
The persistently strong exports alongside relatively weaker imports points to a lopsided economic recovery, analysts have 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.
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”.
June’s figures put the country’s trade balance at $99.05bn, ahead of forecasts for $85bn. 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.
Analysts at Capital Economics estimated that exports had risen in terms of volume as well as value and 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 in a note.
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