China Exports Surge Past Predictions in June, Imports Stall

Chinese exports grew by almost 18% in June, well above forecasts and the highest rate in five months, as the economy recovers from Covid restrictions that hammered business in recent months.

However, imports grew by just 1%, well below forecasts and well under the 4.1% expansion in May.

Despite the buoyant export growth, the country’s trade outlook faces rising pressure in the second half because of fading demand in key export markets, the protracted war in Ukraine and high inflation, which has raised concern of a global recession.

While a weaker yuan and higher global prices bolstered shipment values, the quick resumption of industrial production in key manufacturing hubs and the recovery of port operations and logistics also helped, Wen Bin, the chief economist at Minsheng Bank, said.

Daily container throughput in June at Shanghai port, which had earlier been severely affected by a lockdown, was back to at least 95% of the same level a year earlier, according to official data.

Thanks to government stimulus measures and the lifting of lockdowns, China’s economy entered an upswing last month. It suffered a severe slump in April as the country grappled with its biggest Covid outbreak since 2020.

Official and private surveys show the country’s factory activity shook off three months of declines in June.

Imports were weighed down by the lockdown-induced slackening in commodity imports and subdued domestic consumption. China posted a trade surplus of $97.94 billion last month, versus analysts’ forecast for a $75.70 billion surplus and a $78.76 billion surplus in May.

Uncertain Future

Policymakers are doubling down on infrastructure spending to help recovery from damage inflicted by the anti-virus measures and other economic problems.

China’s foreign trade still faces instability and uncertainty, said Li Kuiwen, a spokesman for the General Administration of Customs, at a news conference in Beijing on Wednesday.

And adding to the headwinds, the highly transmissible BA.5 Omicron sub-variant has been found in several cities over the past week.

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

China is due to release its second-quarter GDP data on Friday. Analysts say the official target of around 5.5% for this year will be hard to achieve without doing away with Beijing’s strict zero-Covid strategy.