China June Trade Data Buoyed by Robust Demand at Home and Abroad

HSBC's Neumann Sees Broad-Based Strength in China

China’s overseas shipments rose from a year earlier as global demand held up and trade tensions with the U.S. were kept in check amid ongoing talks. At home, resilient demand led to a rise in imports.

Key Points

  • Exports rose 11.3 percent in June in dollar terms, the customs administration said Thursday, more than the estimate of 8.9 percent in a Bloomberg survey
  • Imports increased 17.2 percent in dollar terms, leaving a trade surplus of $42.8 billion

Demand for Chinese products has proven resilient this year as global demand holds up. Tensions with the country’s largest trading partner also appear to be easing after 100-day trade talks due to end on July 16 have signaled some progress toward addressing the deficit run by the U.S., which last year reached $347 billion.

At the same time, the stronger-than-expected import reading bodes well for second-quarter gross domestic product growth, due for release Monday, as it may signal that domestic demand hasn’t succumbed to greater curbs this year on lending or the property market.

Economist Takeaways

"Today’s upbeat figures point to still-strong foreign demand for Chinese goods, as well as fairly resilient domestic demand," said Julian Evans-Pritchard, China economist at Capital Economics Ltd. in Singapore. "We are skeptical that the current pace of imports can be sustained for much longer given the increasing headwinds to China’s economy from policy tightening."

"We still expect export growth to slow in the second half 2017 on stronger renminbi so far this year, and uncertainties in external demand," Zhao Yang, Nomura Holdings Inc.’s chief China economist, wrote in a note. "The cooling property market leads to slower domestic investment growth, which may weigh on import growth as well."

"The better-than-expected export growth indicates a resilient trade outlook," said Betty Wang, senior China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong.

"The strength of Chinese exports is a positive sign for global demand," said Rob Subbaraman, chief economist for Asia ex-Japan at Nomura Holdings Inc. in Singapore, adding that shipments are largely comprised of finished goods that show genuine end-demand. "Imports point to strong Chinese demand, raising the chance that second-quarter growth is stable to higher than the first."

The Details

  • In the first half, exports in yuan terms rose 15 percent compared with the same period a year earlier, to 7.21 trillion yuan 
  • First-half imports rose 25.7 percent to 5.93 trillion yuan, customs administration data released earlier showed
  • January to June iron imports rose 9.3 percent year-on-year; crude imports rose 13.8 percent for the same period

— With assistance by Miao Han, Kevin Hamlin, and Yinan Zhao

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