China’s export growth picks up despite weakening global demand

Container ships dock in Nanjing, China, July 13, 2022. In the first half of this year, the total value of China’s merchandise imports and exports was 19.8 trillion yuan, up 9 .4% over one year, according to the General Administration of Customs.

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China’s export growth picked up unexpectedly in July, providing an encouraging boost to the economy as it struggles to recover from a sharp Covid-induced decline, although imports remained sluggish.

Outbound shipments rose 18.0% in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, up from a 17.9% rise in June and topping analysts’ expectations for a 15.0% gain.

Analysts had expected exports to decline amid growing signs of a slowdown in global consumption.

A global factory survey released last week showed demand weakened in July, with orders and production indices falling to their weakest levels since the start of the Covid-19 pandemic in early 2020. .

China’s official manufacturing survey said activity contracted last month, raising concerns that the economy’s recovery from widespread lockdowns in the spring will be slower and bumpier than expected.

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But there were signs that the transportation and supply chain disruptions caused by the shutdowns were continuing to ease, just in time for shippers to prepare for the peak in year-end shopping demand. .

Container throughput for foreign trade at eight major Chinese ports rose 14.5 percent in July, accelerating from the 8.4 percent gain in June, according to data released by the National Ports Association.

Container throughput at the Covid-hit Port of Shanghai hit a record high in July.

Still lukewarm imports

However, import growth was weaker than expected, suggesting that China’s domestic consumption remains weak.

Imports rose 2.3% from a year earlier, compared to June’s 1% gain and missing a forecast of a 3.7% rise.

Analysts expect import momentum to pick up slightly in the second half of the year, supported by construction-related equipment and raw materials as the government ramps up infrastructure spending.

China posted a record trade surplus of $101.26 billion last month due to a weak import reading but solid export growth. Analysts had forecast a trade surplus of $90.0 billion.

The country’s top economic planner said last week that the economy was in the “critical window” for stabilization and recovery, and that the third quarter was “vital”.

Top leaders recently signaled they were set to miss the government’s growth target of around 5.5% for 2022, which analysts said looked increasingly out of reach after the economy shied away from just a contraction in the second trimester.

In late July, the International Monetary Fund sharply cut its growth forecast for China in 2022 to 3.3% from 4.4% in April, citing Covid lockdowns and a worsening crisis in the country’s property sector. .

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