China’s exports last month grew at their fastest in 15 months, 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 keep alive calls for further government stimulus as the US$18.6 trillion economy struggles to get back on its feet. Analysts said 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,” Pinpoint Asset Management chief economist Zhang Zhiwei (張智威) said.
Photo: AFP
“The sustainability of strong exports is a major risk for China’s economy in the second half of the year. The economy in the US is weakening. Trade conflicts are getting worse,” Zhang said.
Outbound shipments from the world’s second-biggest economy grew 8.6 percent year-on-year in value last month, customs data showed yesterday, beating a forecast 8.0 percent increase in a Reuters poll of economists and a 7.6 percent rise in May.
However, imports hit a four-month low, shrinking 2.3 percent compared with a forecast 2.8 percent increase and a 1.8 percent 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 COVID-19 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 toward the government’s economic growth target for this year of about 5 percent.
China’s trade surplus last month stood at US$99.05 billion, the highest in records going back to 1981, compared with a forecast of US$85 billion and US$82.62 billion in May.
The US has repeatedly highlighted the surplus as evidence of one-sided trade favoring the Chinese economy.
Washington in May hiked tariffs on an array of Chinese imports, including quadrupling duties on Chinese electric vehicles (EV) to 100 percent. Brussels last week confirmed it would also impose tariffs on EVs, but only up to 37.6 percent.
Chinese exporters are also on edge heading into US elections in November in case either major party tips fresh trade restrictions.
Turkey last month announced it would impose a 40 percent additional tariff on Chinese-made EVs, and Canada said it was considering curbs.
Meanwhile, Indonesia plans to impose import duties of up to 200 percent on textile products, which come mainly from China; India is monitoring cheap Chinese steel; and talks with Saudi Arabia over a free-trade agreement have reportedly stalled over dumping concerns.
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