Janice R. Andrews
Remarkably resilient exports from China were recorded in June, according to customs statistics that was made public on Friday. Exports surpassed estimates that projected growth of 7.4% to 8%, rising 8.6% year over year to $307.8 billion. Nonetheless, imports decreased to $208.8 billion, a 2.3% decrease from the prior year.
A wider trade surplus of $99 billion was achieved as a result of the strong export performance, up from $82.6 billion in May. Amidst rising trade tensions with the US and Europe, who have both raised tariffs on electric vehicles (EVs) manufactured in China, there was a surge in shipments.
“Tariffs from the US and EU won’t significantly impact overall exports in the short run,” said Zichun Huang of Capital Economics. They only focus on a tiny percentage of Chinese exports. She said that “trade rerouting and exchange rate adjustments” could help lessen the impact of these duties. Huang was also upbeat about export performance going forward, implying that it will sustain economic expansion in the short run.
Huang predicted a recovery despite the drop in imports, citing recent government bond issuances as a catalyst. These bond sales are expected to increase infrastructure spending, which in turn will raise demand for industrial commodities.
For Chinese goods, the Association of Southeast Asian Nations (ASEAN) continues to be the biggest market. From January to June, China’s exports to ASEAN countries increased by 10.7% year over year; in June alone, China exported $49.8 billion to ASEAN nations.
Conversely, over the same year, shipments to the European Union decreased by 2.6%, while exports to the United States increased slightly by 1.5%. The export categories from China that grew the fastest were ships, household appliances, cars, and steel. Remarkably, in the first half of the year, China exported 29.8 million ships and 2.93 million cars.
The EU and US have accused China of overproducing and oversupplying low-cost electric cars on global markets. Both areas have endeavored to apply tariffs on these automobiles as a reaction. China is also worried that the levies could cause its EV exports to decline in light of the slowing domestic market.
The manufacturing purchasing managers index (PMI) from the China Federation of Logistics and Purchasing stayed at 49.5 in June, the same level as in May, indicating that factory activity in the country was unchanged. A PMI value above 50 denotes expansion, and a reading below 50 denotes contraction. The PMI was 50.4 in April.
China’s post-pandemic recovery is nevertheless hampered by declining global demand as a result of interest rate increases by the US Federal Reserve and other central banks to fight inflation. A notable decline in China’s real estate market is impeding expansion as well.
China has set a target for economic growth this year of about 5%, despite these obstacles. Economists predict that further policy support will be needed to accomplish this goal. China’s export performance in the upcoming months will be widely watched as a crucial measure of its economic endurance and adaptation, given the continued unpredictability of the global economic landscape.
