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Thursday, August 06, 2020

China’s trade unexpectedly rose in June amid worsening virus

Exports rose 0.5% from a year ago, while imports expanded 2.7%. Both had been forecast by economists to fall.

By: Bloomberg | Published: July 14, 2020 1:07:19 pm
Genuine bundles of Chinese one-hundred yuan banknotes are arranged for a photograph at the Counterfeit Notes Response Center of KEB Hana Bank in Seoul, South Korea, on Friday, July 13, 2017. (Photographer: SeongJoon Cho/Bloomberg)

China’s exports and imports both rose in June, even as the pandemic continued to ravage the global economy.

  • Exports rose 0.5% from a year ago, while imports expanded 2.7%. Both had been forecast by economists to fall.
  • In yuan terms, exports grew 4.3% in June from a year earlier, while imports rose 6.2%, the customs administration said Tuesday.
(Chart source: Bloomberg)

Key insights

  • With countries such as the US still unable to control the outbreak, there’s no sign of when global demand for Chinese exports will recover sustainably to pre-virus levels.
  • The deterioration of relations with the US adds to the uncertainty for trade, although China has been stepping up efforts to meet the terms of the trade deal.
  • Even with the turn up in June, trade in the first six months of the year is still well down on the same period last year. Exports through the end of June were 6.2% smaller than 2019, while imports were 7.1% lower.
  • Positive net exports will provide some support to Chinese gross domestic product growth in the second quarter, after the historic 6.8% collapse in the first three months. The reading for GDP will be released Thursday.
  • An increase in the trade balance “could be the major support for the second quarter’s GDP growth, but it could only help to a certain extent,” said Iris Pang, chief economist for greater China at ING Bank NV ahead of the data release.

Get more

  • In the first half of the year, exports of textile products including face masks surged by 32.4% in yuan terms. Exports of medicines and pharmaceutical products and medical equipment increased by 23.6% and 46.4%, respectively.
  • Driven by the increase of people working from home, exports of laptops increased 9.1%.

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