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 percent from a year earlier, China’s customs bureau data showed on Tuesday, topping market forecasts for a 1.5% drop and compared with a 3.3% drop in May.
Imports also rose 2.7%, again confounding market forecasts of a 10% slump. They had fallen 16.7% the previous month despite strong levels of imports such as oil, copper, and other metals. It was the first monthly rise in imports in 2020.
That saw the country’s trade surplus for June at $US46.42 billion, compared with an expected $US58.6 billion surplus forecast in an economists poll and the all-time record surplus of $US62.93 billion in May.
China’s economy continues to emerge from the sharp first quarter 9.8% slump (quarter on quarter) or the annual rate of 6.8% but the recovery remains fragile as global demand falters from social curbs and still rising coronavirus cases, especially in the US, Brazil, India, and parts of southern Asia such as Singapore.
Chinese consumption is also subdued amid job losses and concerns about a resurgence in infections. Car sales were weak in June after the rebound in May. Bank lending is at record levels, consumer inflation is steady but very weak for producers.
There’s more detail on investment, retail sales, and production tomorrow – as well as the second-quarter GDP reading.
External risks such as worsening US-China relations, shrinking global demand, and disruptions in supply chains were 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.”
Imports of American goods increased to $US10.4 billion despite higher tariffs imposed in a fight with Washington over trade and technology. Exports to the US were 1% higher at $US39.8 billion.
China’s trade surplus with the United States widened to $US29.41 billion in June from $27.89 billion in May.
For the first six months of the year, the trade surplus narrowed to $US168.02 billion from $US176.69 billion in the first half of 2019.
Elsewhere in Asia the Singapore economy slumped sharply in the June quarter, according to official data, and is now in a deep recession, thanks to the continuing ravages of COVID-19.
In fact, Singapore’s economy suffered a record contraction in the second quarter – a quarter on quarter rate of fall (plunge more like it) of 41.2%, thanks to the lockdowns which were in place from April (when they were reimposed) until June when an easing started.
As of Monday, the country has confirmed more than 46,200 people infections but only 26 deaths.
In effect, the economy not only came to a screaming halt but went backward at a rate of knots. Singapore is now heading for what economists think will be its worst year ever. Economists had forecast a fall of 37%.
The economy slumped at an annual rate of 12.6% in June from the March quarter when it fell a revised 0.3%.
The quarter on fall from December was 3.3%, so the size of the June quarter plunge came as a massive shock.
The government expects full-year GDP to contract in the range of -7% to -4%, the biggest downturn in its history, but that assumes that the $US72 billion in support for business and finance from the government, can trigger a second-half rebound.
As the lockdowns have been eased, some areas of the economy have been more active, but tourism, aviation, and related businesses are doing it hard, as they are around the world.
The impact was broad-based with the services and construction sector hardest hit. Construction, which ground to a near halt, plummeted 95.6% on a quarter-on-quarter annualised seasonally-adjusted basis.
The manufacturing sector grew 2.5% from a year ago, mainly due to a surge in output in the biomedical sector (PPE products such as masks), though that was still lower than the 8.2% rise in the first quarter.
It’s no wonder the ruling PAP government went to the polls last Friday and was re-elected by a slightly smaller majority. Going after such a dramatic fall – even though one had been forecast – would have been very uncomfortable.