BEIJING- China’s export growth is expected to have slowed in July, adding to signs of weakening global demand, while imports likely picked up slightly, a Reuters poll showed.
Exports likely grew 15.0 percent last month from a year earlier, narrowing from a 17.9 percent expansion in June, according to a median forecast in a Reuters poll of 20 economists.
“Final demand for Chinese goods is now softening. After a pandemic-induced surge, advanced economy retail sales are dropping back to trend,” said Julian Evans-Pritchard, Senior China Economist at Capital Economics said in a note last week.
Export momentum could moderate further in coming months, with China’s official July factory survey signaling a contraction in orders.
“The robust export growth seen over the past two years is really behind us and is set to decelerate over the next few quarters as major developed economies enter recessions amid a more synchronized global slowdown,” said Nomura in a note.
Imports likely rose 3.7 percent in July versus a year ago, the poll showed, higher than the 1.0 percent growth in June, partly boosted by infrastructure investment.
“China’s import momentum (is expected) to pick up in the second half, supported by demand for machinery, equipment, and commodities related to investment in infrastructure and strategic sectors,” said Oxford Economics analysts in a note.
In July, 3,876 major projects started construction, involving total investment of 2.4 trillion yuan ($355.25 billion), the Securities Times said on Thursday.
With the economy on shaky ground after a sharp COVID-induced slowdown in the second quarter, authorities are doubling down on an infrastructure push, dusting off an old playbook to prop up the economy, pledging 800 billion yuan in new credit quota to fund big projects.
China’s trade surplus is likely to have narrowed to $90 billion in July from a record high of $97.94 billion in June.
China’s exports rose at the fastest pace in five months in June as factories revved up after the lifting of COVID lockowns, but a sharp slowdown in imports, fresh virus flare-ups and a darkening global outlook pointed to a bumpy road ahead for the economy.
Analysts say the rebound in exports reflected an easing of supply chain disruptions and port congestion that hammered the world’s second-largest economy in spring when the government rolled out widespread lockdowns.
Outbound shipments in June rose 17.9 percent from a year earlier, the fastest growth since January, official customs data showed on Wednesday, compared with a 16.9 percent gain in May and much more than analysts’ expectations for a 12.0 percent rise.
“This jump reflects the easing of supply chain disruptions coming out of lockdowns and, most importantly, fewer bottlenecks at ports,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“Although total container throughput at Chinese ports was little changed last month, the recent weakness of domestic shipping demand has freed up more port capacity for foreign trade,” he said.
Daily container throughput in June at Shanghai port, which had been severely affected by a lockdown, had recovered to at least 95 percent of year-earlier levels, according to official data.
Exports of computers, steel products and autos contributed to the robust growth. China exported 248,000 vehicles in June, up 30.5 percent from a year earlier.
However, economists say the strength in exports is likely to fade as rising global interest rates to rein in inflation begin to sap demand and broader economic growth.
The threat of further pandemic restrictions at home also hangs over Chinese businesses and households, while the Ukraine war has put renewed pressure on world supply chains and raised exporters’ operating costs.
China’s foreign trade still faces instability and uncertainty, said Li Kuiwen, a spokesman for the General Administration of Customs, at a news conference in Beijing.
Zhiwei Zhang, chief economist at Pinpoint Asset Management, said that while foreign trade continued to be the “best performing engine of the economy,” the outlook points to “a bumpy road with disruptions.”
“As the demand in the developed countries shifts towards services from goods, the strong export growth may not be sustainable in the second half of the year. The current (COVID)outbreak in Shanghai and some other cities again cast uncertainty to the economic recovery in Q3,” Zhang added.
