China exports top forecasts as EU, ASEAN shipments offset US drop

BEIJING: China’s exports rose more than expected last month, with official data on Thursday showing a jump in shipments to the European Union and other markets offset a drop in those to the United States.

The figures come as Beijing and Washington navigate a shaky trade war truce and will provide a boost to the country’s leaders as they look to kickstart an economy beset by weak domestic consumption.

The reading showed that exports jumped 7.2 percent in July, an improvement on the previous month and much better than the 5.6 percent forecast in a survey of economists by Bloomberg.

The report revealed that US-bound goods sank 21.7 percent year-on-year as Donald Trump’s levies — while down from the eye-watering levels initially announced — kicked in.

However, exports to the European Union jumped 9.2 percent and those to the Association of Southeast Asian nations rose 16.6 percent.

Southeast Asia and China have deeply interwoven supply chains and Washington has long accused Chinese manufacturers of “transshipping” — having products pass through a country to avoid harsher trade barriers elsewhere.

In another welcome signal for China’s leaders, imports — a key gauge of struggling domestic demand — jumped 4.1 percent on-year in July, compared with a Bloomberg forecast of a one-percent fall.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the data showed “exports supported the economy strongly so far this year”.

“Export growth may slow in coming months, as the front loading of exports due to US tariffs fades away,” he said.

“The big question is how much China’s exports will slow and how it would spill over to the rest of the economy,” he said.

Beijing has set an official goal of around five percent growth this year.

But it has struggled to maintain a strong economic recovery from the pandemic, as it fights a debt crisis in its massive property sector, chronically low consumption and elevated youth unemployment.

Further US talks

Factory output shrank more than expected in July, data showed last week, logging its fourth straight month of contraction in a further sign that trade tensions were hitting the export-dependent economy.

But the economic superpowers are working to reach a deal to lower trade tensions.

The two hammered out a 90-day truce in May, and last month in Stockholm agreed to hold further talks on extending the ceasefire past an August 12 deadline.

That pact has temporarily set fresh US duties on Chinese goods at 30 percent, while Beijing’s levies on US products stand at 10 percent.

US Trade Representative Jamieson Greer said following the Stockholm talks that Trump would have the “final say” on any extension of a tariffs truce.

Higher tariffs on dozens of trading partners — including a blistering 35 percent on Canada — also came into force Thursday as Trump seeks to reshape global trade to benefit the US economy.

China’s dominance in the critical field of rare earths has also been a key point of contention with Washington, and Beijing’s recent restrictions on their export have sounded alarm bells at factories in the United States and elsewhere.

Official data showed Thursday that Chinese exports of the elements receded last month from a June spike, though they remained high compared to recent years.

Analysts say China’s trade will face significant hurdles in the latter half of the year as uncertainties linger.