Chinese exports pick up, but global risks cloud trade outlook


Containers and trucks are seen after a snowfall at the port of Qingdao, Shandong province, China February 14, 2019. REUTERS/Stringer/File Photo

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  • China’s June exports grow at fastest pace in 5 months
  • June import growth slows, misses f’cast
  • Global export outlook remains uncertain
  • Darkening of the global economic context, the war in Ukraine adds to the tension
  • New COVID outbreaks are also a concern

BEIJING, July 13 (Reuters) – China’s exports grew at their fastest pace in five months in June as factories ramped up after the lifting of COVID lockdowns, but a slowdown in imports, new outbreaks of virus and a darkening global backdrop have indicated a bumpy road ahead for the economy.

Analysts say the rebound in exports reflects the easing of supply chain disruptions and port congestion that hammered the economy in the spring when the government implemented widespread shutdowns.

Outbound shipments in June rose 17.9% from a year earlier, the fastest growth since January, official customs data showed on Wednesday, compared with a 16.9% gain seen in May and well more than analysts’ expectations for a 12.0% rise.

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“The jump reflects easing supply chain disruptions from shutdowns and, importantly, diminishing bottlenecks at ports,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

“Although total container throughput at Chinese ports was little changed last month, recent weakness in domestic shipping demand has freed up more port capacity for foreign trade,” he said.

Daily container throughput in June at the port of Shanghai, which had previously been badly hit by a lockdown, had returned to at least 95% of the previous year’s levels, official data showed.

Auto exports contributed to the robust growth. China exported 248,000 vehicles in June, up 30.5% from a year earlier.

However, economists say the strength in exports is likely to fade as rising global interest rates to curb inflation begin to undermine demand and broader economic growth.

The threat of further pandemic restrictions in the country is also weighing on businesses and households, while the war in Ukraine has put renewed pressure on global supply chains and increased operating costs for exporters.

China’s foreign trade still faces instability and uncertainty, Li Kuiwen, spokesperson for the General Administration of Customs, told a press conference in Beijing.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, said that while foreign trade continues to be the “best performing engine of the economy”, the outlook points to “a bumpy road with disruptions”.

“As demand in developed countries shifts to services from goods, strong export growth may not be sustainable in the second half. The current outbreak (COVID) in Shanghai and some other cities has once again cast uncertainty over the economic recovery in Q3,” Zhang added.


Thanks to government stimulus measures and the lifting of lockdowns, China’s economy started to pick up steam last month. It suffered a severe crisis in April as the country grappled with its biggest COVID-19 outbreak since 2020.

Official and private surveys show that factory activity in the country improved in June after three months of decline, while the service sector recorded an impressive rebound. Read more

The slowdown in imports, however, raised questions about the strength of the recovery.

June imports rose just 1.0% from a year earlier, slowing from May’s 4.1% gain, weighed down by the lockdown-induced slowdown in commodity imports and weak domestic consumption. Analysts had expected an increase of 3.9%.

Evans-Pritchard noted that import volumes plunged to their lowest level in three years last month, indicating continued weakness in China’s construction sector, usually an important engine of growth.

Almost all of China’s commodity imports were notably weaker. Daily crude oil imports in June fell 11% from a year earlier to their lowest level since July 2018, while coal imports fell 33%.

Soybean imports also fell 23% from a year earlier as high world prices dampened demand for oilseeds.

But Iris Pang, chief economist for Greater China at ING, said import demand should have picked up slightly as calculated Chinese demand for goods ahead of shipments was hit by port closures and congestion between April and May. She expects imports to rebound if there are no more long lockdowns in major Chinese cities.

China posted a trade surplus of $97.94 billion last month, while analysts had forecast a surplus of $75.70 billion and a surplus of $78.76 billion in May.

Friday’s data is expected to show further, albeit modest, signs of economic improvement, with industrial production picking up in June and retail sales stabilizing after months of contraction. But growth for the second quarter as a whole has likely slowed sharply or even contracted, suggesting policymakers will need to do much more to boost activity. Read more

Even then, economists doubt that gross domestic product growth will meet the government’s target of around 5.5% for this year unless it relaxes its strict zero COVID strategy.

As pressure mounts from an easing global backdrop, China’s key property market remains fragile and weak consumer spending in the country means its traditional engines of growth also remain underpowered. A new surge in infrastructure spending will take time to get under way.

Adding to the headwinds, the highly transmissible BA.5 Omicron subvariant has been found in multiple cities over the past week. Read more

As of Monday, 31 cities – representing 17.5% of China’s population and 25.5% of GDP – have implemented full or partial shutdowns or some district-level control measures, Nomura analysts said in a note. .

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Reporting by Stella Qiu, Ellen Zhang and Ryan Woo; Editing by Bradley Perrett, Shri Navaratnam and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.


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