China’s export growth unexpectedly picked up speed last month, offering an encouraging boost to the economy as its struggles to recover from a slump induced by the COVID-19 pandemic, but weakening global demand could start to drag on shipments in coming months.
Exports grew 18.0 percent from a year earlier, the fastest pace this year, Chinese General Administration of Customs data showed yesterday, compared with a 17.9 percent rise in June and beating analysts’ expectations for a 15.0 percent gain.
“China’s export growth surprised again on the upside. [It] continues to help China’s economy in a difficult year, as domestic demand remains sluggish,” Pinpoint Asset Management Ltd (保銀私募基金管理) chief economist Zhiwei Zhang (張智威) said.
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Last month’s exports might also have been buoyed by pent-up demand from Southeast Asia as supply snarls eased and factories there ramped up production, Jones Lang Lasalle Inc chief economist Bruce Pang (龐溟) said in a research note.
Moreover, amid surging inflation, some European and US customers might have frontloaded orders heading into the holiday season to ensure they had goods on hand, he added.
However, many analysts have expected shipments to fade amid cooling global consumption.
While export growth remained high, mainly backed by price factors, the volume of exported goods dropped last month, Zhixin Investment Research Institute (植信投資研究院) senior analyst Chang Ran (常冉) said.
“Looking ahead in the second half of the year, exports are expected to be resilient in the short run, but weakening external demand may pressure them in the fourth quarter,” Chang said.
After a shaky second quarter, most analysts have expected China’s import momentum to pick up modestly in the latter half of the year, supported by construction-related equipment and commodities as the government ramps up infrastructure spending.
However, imports last month were again weaker than expected, suggesting domestic demand remains soft.
Imports rose 2.3 percent from a year earlier, compared with June’s 1 percent gain and missing a forecast of a 3.7 percent rise.
“Despite an uptick in domestic demand amid loosening COVID control measures, the weak performance of the production side dragged on imports,” said Xu Shuzheng, a researcher at CITIC Securities Co (中信證券), adding that fresh COVID-19 flare-ups could hinder the economy’s recovery.
Crude oil imports last month fell 9.5 percent from a year earlier, as fuel demand recovered more slowly than expected due to virus outbreaks.
The volume of imported integrated circuits — a major Chinese import — also dropped 19.6 percent last month from a year earlier, Reuters’ calculations showed.
That could be an additional red flag for exports, as a significant amount of the country’s imports are components for goods that are then re-exported.
China posted a record US$101.26 billion trade surplus last month, well above the US$90.0 billion surplus analysts had expected.
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