China’s trade with Europe seen as key amid US frictions after June imports, exports suggest recovery from coronavirus

Chinese exports returned to growth last month, with a rise of 0.5 per cent from a year ago, while imports in US dollar terms also rose by 2.7 per cent in June

China-US trade frictions are seen as unlikely to improve ahead of November’s election, but the European Union is seen as a key variable to China’s coronavirus recovery

Reading Time:4 minutes

The rise in exports in June continued to be buoyed by growth in shipments of masks, medical products and work-from-home equipment. Photo: AFP

Published: 8:20pm, 14 Jul 2020Updated: 11:00pm, 14 Jul 2020

Chinese exports will continue to face downside pressures due to the impact of the coronavirus pandemic on the global economy, but the stronger-than-expected trade performance in June provides hope for a further improvement in the second half of the year, analysts said on Tuesday.

Chinese exports returned to growth last month, with a rise of 0.5 per cent from a year ago, beating the 2.0 per cent decline expected by the market and improving sharply from the 3.3 per cent slump in May, according to data released by the General Administration of Customs.

China’s imports in US dollar terms also rose by 2.7 per cent in June, again much better than expectations for a 9.0 per cent drop and partly reversing the fall of 16.7 per cent in the previous month.

But how trade with the European Union develops will be a key variable for Chinese exports in the coming six months, given that the continued rapid spread of the coronavirus pandemic and deteriorating US-China relations are expected to weigh on Chinese exports to America.

China-US trade frictions are unlikely to get any better before the US election, but we can still do better in the EU, the potential of the EU market is still there

Huo Jianguo

“Because we have explored nearly all markets we could, Europe and the US markets are still the largest part,” said Huo Jianguo, the former head of the Chinese Academy of International Trade and Economic Cooperation, a think tank under China’s Ministry of Commerce.