China’s exports are rising but the outlook is bleak as global growth slows

China’s export growth unexpectedly picked up steam in July, providing an encouraging boost to the economy as it struggles to recover from a Covid-induced slump.

But weakening global demand could affect supplies in the coming months.

Exports rose 18 percent in July from a year earlier, the fastest pace this year, official tariffs data released yesterday showed, compared with a 17.9 percent rise in June, beating analysts’ expectations for a 15 percent gain.

Outbound shipments have been one of the few bright spots for the Chinese economy in 2022 as widespread lockdowns hit businesses and consumers hard and the once mighty real estate market lurches from crisis to crisis.

“China’s export growth has again surprised on the upside. (It) continues to help China’s economy in a difficult year as domestic demand remains sluggish,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

However, many analysts had expected exports to soften as it looks increasingly likely that the global economy is headed for a serious slowdown, weighed down by rising prices and rising interest rates.

A global factory survey released last week showed demand weakened in July, with new orders and production indices falling to their weakest levels since the pandemic began in early 2020.

China’s official manufacturing survey pointed to a slowdown in activity last month, raising concerns that the economy’s recovery from spring lockdowns will be slower and bumpier than expected. But there were signs that transport and supply chain disruptions caused by Covid restrictions were easing further, just in time for shippers preparing for peak demand at the end of the year.

Foreign trade container throughput at eight major Chinese ports rose 14.5 percent in July, compared with an 8.4 percent gain in June, according to data from the domestic ports association. Container throughput in the Covid-hit port of Shanghai hit a record high last month.

July exports may also have been boosted by pent-up demand from Southeast Asia as supply slacked and local factories ramped up production, Bruce Pang, Jones Lang LaSalle’s chief economist and research director, said in a research note.

With the real interest rate negative and inflation rising, some European and US customers may have frontloaded orders to ensure they stock goods at a lower cost, he added. China’s exports are rising but the outlook is bleak as global growth slows

Fry Electronics Team

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