China Reports Unexpected Increase In Exports, Imports For June

Andrew Cummings
July 15, 2020

China's exports and imports both rose in June, signaling that demand at home and overseas may have started to recover even as the pandemic continues to ravage the global economy. In USD-terms, exports were up 0.5% y/y from -3.3% y/y in May while imports rebounded 2.7% y/y from -16.7% y/y in May, its first expansion in four months.

"The reopening of major western economies and elevated overseas demand for PPEs (personal protective equipment) and masks supported Chinese exports in June", said Boyang Xue, a China analyst at Ducker Frontier.

China's iron ore imports jumped 17% in June from the May total to hit the highest level since October 2017 according to customs data released overnight.

China, the world's top crude oil importer, took in 53.18 million tonnes of oil, according to data from the General Administration of Customs on Tuesday, equivalent to 12.9 million barrels per day (bpd).

And fiscal stimulus should keep import demand strong, they added. "At the half-year mark, China's trade surplus stood at US$167.80 billion YTD compared to US$176.67 billion in 1H19".

"Faced with difficulties presented by the sudden epidemic, we're still honouring our commitments and implementing the (trade) agreement", customs spokesman Liu Kuiwen told reporters on Tuesday.

U.S. President Donald Trump said on Friday he was not thinking about negotiating a "Phase 2" trade deal with China as relations between Washington and Beijing have been "severely damaged" due to the coronavirus pandemic and other issues.

"Looking forward, we expect July data to see some weaknesses and exports to be under pressure in the second half of the year", said Xing Zhaopeng, markets economist at Australia & New Zealand Bank Group Ltd. Chinese consumption is also subdued amid job losses and concerns about a resurgence in infections. "The strong rebound in PMI indexes for the US and Eurozone in June signals further gradual improvement in Chinese exports in the second half of 2020, particularly as retailers start to place orders for the Christmas season". "In addition, production disruptions in China's trade competitors also helped to shift some orders to Chinese exporters". Exports in dollar terms through the end of June were 6.2 per cent smaller than in 2019, while imports were 7.1 per cent lower.

China had posted a trade surplus of $46.42 billion in June, compared with the poll's forecast for a $58.60 billion surplus and $62.93 billion surplus in May.

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