China’s exports rose 7 percent in July from a year earlier, below economists’ forecasts for growth closer to 10 percent. Trade dynamics and economic conditions in major markets such as the United States affected demand. Chinese leaders have increased investment in manufacturing to stimulate an economy that slowed during the pandemic and is still growing at a slower pace than expected. However, efforts to control inflation by raising interest rates have reduced consumer demand in affluent Western countries.
Imports climbed 7.2 percent to $215.9 billion, gaining momentum from stronger trade with other Asian countries that now supply many industrial components, materials, and consumer products to China. Exports to the United States rose 2.4 percent year-on-year, while shipments to Southeast Asian countries, now Beijing’s biggest trading partner overall, jumped 11 percent.
Exports totaled $300.6 billion in July, expanding at the slowest pace in three months and resulting in a trade surplus of $84.7 billion for the month. This was down from a record $99.1 billion the month before, but the surplus rose nearly 8 percent in January-July from the same period a year earlier. During the first seven months of the year, China’s exports climbed 4 percent from a year earlier, while imports were up a modest 2.8 percent as growth in consumer demand remained muted.
China’s exports are forecast to weaken in the coming months due to anticipated increases in US and European tariffs on electric vehicles. Reports indicate that freighters have been seen carrying significant shipments of vehicles to European ports to avoid the new duties. Exports of vehicles rose 18 percent in the first seven months of the year compared to the same period in 2023.
The rebound in imports in July is likely to continue as the government takes steps to support consumer demand and revitalize China’s property sector, according to Zichun Huang, China economist at Capital Economics. “We expect import volumes to rise further in the coming months. The leadership appears more concerned about the near-term outlook compared to a few months ago and has indicated an increase in fiscal spending. This is likely to boost construction activity, driving up demand for industrial commodities,” Huang said.
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