China trade: exports continue as ‘best performing economic engine’, but is it the ‘last hurrah’?
- China’s exports grew by 17.9 per cent in June compared with a year earlier, while imports grew by 1 per cent last month
- China’s imports from Russia surged by 56.3 per cent to US$9.7 billion in June compared to a year earlier
China’s export machine might have enjoyed its “last hurrah” despite continued growth last month with overseas demand set to cool and the shadow of coronavirus restrictions looming in the second half of the year, analysts warned.
Imports, however, grew by just 1 per cent last month from a year earlier to US$233.3 billion, down from 4.1 per cent growth in May.
“As the demand in developed countries shifts towards services from goods, the strong export growth may not be sustainable in the second half of the year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management, noting June’s exports received a boost from the reopening of Shanghai after a two-month lockdown.
We think this may be the last hurrah for China’s pandemic export boom before shipments drop back on cooling demand
The easing of shipping bottlenecks also contributed, according to Julian Evans-Pritchard, senior China economist at Capital Economics.
“But we think this may be the last hurrah for China’s pandemic export boom before shipments drop back on cooling demand,” he said.
He added that high inflation and rising interest rates in key markets for Chinese goods will also weigh on consumer purchasing power, while the reversal of coronavirus-induced shifts to consumption patterns will provide an additional headwind.
“Import volumes may fare slightly better going forward as the domestic economy recovers from the recent virus wave. But inbound shipments are still likely to remain soft given relatively modest policy support and continued deleveraging among property developers,” he said.