China reports unexpected rise in June exports as economies around the world reopen

Imports also grew for the first time this year as the world's second-biggest economy recovers from the pandemic-induced slowdown

A container is loaded on to a ship at Qingdao's port in China. The country's debt is on track to hit 335 per cent of GDP, according to a new report by the IIF AP

China’s exports unexpectedly rose in June as overseas economies reopened after lockdowns, while imports grew for the first time this year, reinforcing views the recovery from the pandemic is gaining traction in the world’s second-largest economy.

Exports in June edged up 0.5 per cent from a year earlier, customs data showed on Tuesday, beating analysts’ expectations for a 1.5 per cent drop and compared with 3.3 per cent decline in May.

Imports also rose 2.7 per cent, confounding market expectations for a 10 per cent drop. They had fallen 16.7 per cent the previous month.

“The reopening of major western economies and elevated overseas demand for PPEs [personal protective equipment] and masks supported Chinese exports in June,” said Boyang Xue, a China analyst at Ducker Frontier.

“In addition, production disruptions in China’s trade competitors also helped to shift some orders to Chinese exporters.”

China’s economy is gradually emerging from a sharp 6.8 per cent contraction in the first quarter, but the recovery remains fragile as global demand falters from social curbs and still rising coronavirus cases. Chinese consumption is also subdued amid job losses and concerns about a resurgence in infections.

The country’s export performance, however, has not been as severely affected by the global slowdown as some analysts had feared, though weak overseas orders may weigh on its manufacturers in the coming quarters.

External risks such as worsening US-China relations, shrinking global demand and disruptions in supply chains are likely to pressure China’s trade outlook in the long term, Institute of Advanced Research at Shanghai University of Finance and Economics said in a report on Saturday.

“In the second half, export and import growth are highly likely to extend declines seen in the first half.”

But Mr Xue looked to positives in Tuesday’s trade figures as a sign the economy had turned a corner.

“The significant improvement in China’s imports is an indication of the country’s accelerating economic recovery, which has been mainly driven by substantial increases in investments in sectors such as real estate and infrastructure.”

Iron ore imports jumped in June, the trade data showed, fuelled by rising shipments from miners and robust demand in China. Crude oil imports also hit a record.

US President Donald Trump said on Friday he was not thinking about negotiating a “Phase 2” trade deal with China as relations between Washington and Beijing have been “severely damaged” due to the coronavirus pandemic and other issues.

China’s trade surplus with the US widened to $29.41 billion (Dh107.93bn) in June from $27.89bn in May.

The country’s trade surplus for June stood at $46.42bn, compared with an expected $58.6bn surplus forecast in the poll and a surplus of $62.93bn in May.