China’s export growth unexpectedly accelerates in June

China’s export growth unexpectedly picked up in June, shrugging off the impact of port disruptions in southern China and helping to underpin the economy amid signs the recovery is starting to slow.

Export growth accelerated to 32.2% in dollar terms in June from a year earlier, the customs administration said Tuesday, overturning economists expectations of a slowdown to 23%. Imports climbed 36.7%, also beating the median forecast of 29.5%. That left a trade surplus of $51.5 billion for the month, the highest since January.

Global appetite for Chinese goods including medical goods and work-from-home equipment has helped spur exports this year and the data showed a broad-based expansion, with stronger shipments of goods such as cell phones, refined oil products and shoes. The surge in trade last month came despite a resurgence in coronavirus cases in southern China that had caused delays in shipments at some major ports for much of June.

“The surprise surge in exports is probably in large part due to rising commodity prices, as commodities like iron ore soared and price pressures passed on from imports to exports,” said Zhou Hao, senior emerging markets economist at Commerzbank AG. Export growth will likely slow in the second half of the year because of a high base last year, he said.

Li Kuiwen, a spokesman for the customs administration, also pointed to slower growth in imports and exports for the rest of the year, while noting that full-year trade is still expected to register relatively fast expansion.

“The development of foreign trade will still face quite a number of uncertain and unstable factors in the second half of the year,” Li said, as the coronavirus is still spreading at multiple places around the world and the pandemic situation remains complex.

Export growth to the U.S. slowed to 17.8% in June, while picking up strongly to Hong Kong, Japan and South Korea. China’s trade surplus with the U.S. continued to increase, reaching $32.6 billion last month.

The slowdown in import growth, however, suggested that domestic demand recovery might be losing steam, though the headline reading remained relatively strong.

“The strong external balance contrasts the weakness of domestic economy,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. “However, it is the latter the leadership cares about under the flagship dual circulation strategy.” As export remains strong, the authorities are comfortable with the currency outlook regardless of the changing interest rate cycle with the US Fed, he said.

China’s central bank cut lenders’ reserve required ratio last Friday, prompting some economists to speculate that policymakers were taking a pre-emptive approach by easing policy. Data due Thursday on China’s gross domestic growth, retail sales, investment and industrial production will help shed more light on how the recovery is progressing.

Earlier, the customs administration reported trade in yuan figures, showing exports climbed 28.1% in the first half of the year from a year earlier, while imports rose 25.9%.