Demand for Chinese-made goods is soaring as the world continues to bounce back from the pandemic. That’s helping to calm fears about the recovery in the second largest economy.
Exports reached $281 billion last month in US dollar terms, up 32% from a year ago, according to Chinese customs data released Tuesday. That’s the fastest rate of growth since February, and far higher than the 23% growth forecast in a Reuters poll of analysts.
The spike remains high even when compared to June 2019, before Covid-19 broke out: It’s a 32% leap over that time period as well.
Global demand helped lift exports, according to Li Kuiwen, a spokesman for the General Administration of Customs. Li told reporters at a press conference in Beijing that shipments to the United States and Latin America were particularly strong.
The big boost to exports is good news for China, coming just before it releases GDP figures for the April-to-June quarter on Thursday.
There have been a few troubling signs for the Chinese economy and its role in global trade recently as the cost of imported commodities surges and as supply chains have been disrupted by the temporary closure of key ports in South China. An ongoing energy shortage in the country’s important manufacturing and exports hubs has weighed on activity, too.
Late last week, the People’s Bank of China sparked even more concern about flagging growth when it announced that it would cut the reserve requirement ratio for most financial institutions by 50 basis points, a move that would allow banks to lend more. It was the first cut to that rate since April 2020.
“The trade picture looks less worrying,” wrote Ken Cheung, chief Asian foreign exchange strategist at Mizuho Bank, in a Tuesday research note, adding that the firm export figures should “help contain fears” of any disappointment in the GDP data to be released Thursday.
Imports also surged to $230 billion, jumping 37% in June from a year earlier. Compared with the same period in 2019, they were up more than 40%. Li, the Chinese customs official, said the surge in the value of imports was partly because of the rising costs of global commodities.
Li also said Tuesday that the shipping backlog at ports in South China has started to ease. Operations at Yantian, an important container port in Shenzhen, have already returned to normal.
Stocks in Asia moved higher on Tuesday. Hong Kong’s Hang Seng Index (HSI) rose 1.6% after the release of China’s trade data. China’s Shanghai Composite (SHCOMP) was up 0.5%. Japan’s Nikkei 225 (N225) and South Korea’s Kospi (KOSPI) were also up 0.5% and 0.8%, respectively.
Investors will now turn their attention to China’s GDP data on Thursday for further clues about the economy.
“We will watch for signs of a slowdown in China’s data after the economy has come through the Covid-19 shock stronger than global peers,” wrote analysts from BlackRock in a research report on Monday. “China is already a distinct pole of global growth. We believe it is time to also treat it as an investment destination separate from [emerging markets] and [developed markets].”
But growth is starting to slow as China’s policy stance remains relatively tight. They also noted that the country’s regulatory crackdown on tech companies is ongoing.