BEIJING (Reuters) – China’s exports rose unexpectedly in June as the overseas economies reopened after shutdowns, while imports rose for the first time this year, reinforcing views that the pandemic recovery is gaining momentum in the world’s second largest economy.
FILE PHOTO: Cranes and containers are seen at the Yantian port in Shenzhen, after the new coronavirus disease (COVID-19), Guangdong province, China 17 May 2020. Photo taken 17 May 2020. REUTERS / Martin Pollard
Exports in June increased by 0.5% compared with the previous year. Customs data showed on Tuesday, beating analysts’ expectations of a 1.5% decline, compared with a 3.3% decline in May.
Imports also increased by 2.7%, which surprised the market’s expectations of a 10% decrease. They had fallen 16.7% the previous month.
“The opening of major Western economies and increased foreign demand for PPEs (personal protective equipment) and masks supported Chinese exports in June,” said Boyang Xue, a Chinese analyst at Ducker Frontier.
“In addition, production disruptions in China’s trade competitors have also contributed to shifting certain orders to Chinese exporters.”
China’s economy is gradually recovering from a sharp contraction of 6.8% in the first quarter, but the recovery remains fragile as global demand falters from social curbs and ever-increasing coronavirus cases. Chinese consumption is also subdued in the midst of jobs and concerns about a recurrence of infections.
However, the country’s export performance has not been as severely affected by the global downturn as some analysts had feared, although weak foreign orders could weigh on its producers in the coming quarters.
External risks such as worsening US-China relations, declining global demand and supply chain disruptions are likely to put pressure on China’s long-term trade prospects, the Institute of Advanced Research at Shanghai University of Finance and Economics said in a report on Saturday.
“In the second half, export and import growth is very likely to prolong the declines in the first half of the year.”
But Xue looked positive in Tuesday’s trade figures as a sign that the economy had turned a corner.
“The significant improvement in China’s imports is an indication of the country’s faster economic recovery, which has been driven primarily by significant increases in investment in sectors such as real estate and infrastructure.”
Iron ore imports jumped in June, trade data showed, driven by rising shipments from miners and strong demand in China. Imports of crude oil also broke records.
US President Donald Trump said on Friday that he was not thinking of negotiating a “phase 2” trade agreement with China because relations between Washington and Beijing have been “severely damaged” due to the coronavirus pandemic and other issues.
China’s trade surplus with the United States increased to $ 29.41 billion in June from $ 27.89 billion in May.
The country’s trade surplus for June was $ 46.42 billion, compared to an expected surplus of $ 58.6 billion in the survey and a surplus of $ 62.93 billion in May.
Reporting by Gabriel Crossley and Stella Qiu; Edited by Jacqueline Wong