China’s Exports Rise in Another Sign of Stabilizing Economy

Updated on
China June Imports Fall 6.7% on Year
Bloomberg

China’s exports rose for the first time in four months in June, providing fresh evidence that growth is stabilizing ahead of gross domestic product data this week.

Overseas shipments rose 2.1 percent from a year earlier in yuan value, the customs administration said in Beijing on Monday, exceeding the median estimate in a Bloomberg survey for 1.2 percent growth. Imports dropped 6.7 percent, narrowing from the fall of 18.1 percent previously reported in May, leaving a trade surplus of 284.2 billion yuan ($45.8 billion).

The improvement in exports provides a cushion for an economy weighed by a slump in investment growth that is putting Premier Li Keqiang’s 2015 growth target of about 7 percent at risk. As monetary easing and fiscal stimulus stabilize demand, a stronger export sector may help prevent China’s slowdown from deepening after a month-long stocks rout added to challenges.

“Exports are expected to maintain modest growth in coming months to help the economy,” said Liu Xuezhi, an economist with Bank of Communications Co. in Shanghai. “Imports improved significantly in June because of lower import duties.”

Stocks rose for a third day as more companies resumed trading. The benchmark index climbed 2.3 percent at 11:07 a.m.

Waning Competitiveness

Exporters face weak external demand and a strong yuan, Huang Songping, a spokesman for the customs bureau, said at briefing. A rise in labor costs is the main reason for weakening competitiveness, while industrial overcapacity is hurting imports, Huang said. Trade should improve in the second half, with commodity prices set to recover.

“A return to growth for exports after three months of declines is certainly a positive,” wrote Bloomberg’s Chief Asia Economist Tom Orlik. “However, low single-digit export growth year-to-date against a background of the strengthening global economy is not particularly impressive. With real estate construction also weak, China’s main external and domestic engines of demand are both misfiring.”

China’s headline GDP growth -- to be released Wednesday -- may have slowed to 6.8 percent in the second quarter from 7 percent in the first, according to a Bloomberg survey.

In other signs that growth is stabilizing, the nation’s consumer-price index increased 1.4 percent last month from a year earlier, compared with the 1.2 percent increase in May, data last week showed. Growth in industrial output and credit accelerated in May, helping offset a further drop in the pace for fixed-asset investments. Readings for June are also scheduled for this week.

U.S. Shipments

Elsewhere in Asia, China’s slowdown is contributing to sluggishness as exports fall in most major Asian economies, according to data compiled by Bloomberg. Meanwhile, demand from the U.S. continues to underpin China’s shipments, with exports to the world’s biggest economy climbing 12 percent in June from a year earlier.

China’s trade performance is still far below the government’s target, and the yuan’s strength against euro, yen and other emerging market currencies will continue to weigh on its exports, said Li-Gang Liu, chief China economist for Australia & New Zealand Banking Group Ltd. in Hong Kong.

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— With assistance by Xin Zhou

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