- Strong shipments of medical supplies, electronics and ‘work-from-home equipment’ power July’s boom, with exporters capitalising on lockdowns overseas
Finbarr Bermingham and Organge Wang
, 7 Aug-
Powered by rising overseas demand for electronics, medical supplies and other goods to be used in coronavirus lockdowns around the world, China’s export growth surged past expectations in July, with outbound shipments up 7.2 per cent from a year earlier.
Imports contracted by 1.4 per cent from a year earlier, worse than analysts’ forecasts in US dollar terms, data released by the Chinese Customs Administration on Friday showed.
A group of economists polled by Bloomberg had forecast exports to fall by 0.7 per cent in US dollar terms, while imports were predicted to rise by 0.8 per cent.The surge in exports comes after a better-than-expected month in June, when exports returned to minor growth at 0.5 per cent. However imports have fallen back after 2.7 per cent growth in June.
China’s trade balance for July stood at US$62.33 billion, increasing from US$46.2 billion in June.
Analysts pointed to strong shipments of medical supplies and “work-from-home equipment” as reasons behind the surge in exports. Indeed, as other economies around the world have veered in and out of lockdown, China’s exporters appear to have been a beneficiary.
“In July, the export strength was largely driven by electronics – especially ‘automatic data processing equipment’, mobile phones, household appliances, audio and video devices – and hi-tech products, with traditional categories like plastic and textile also contributing well,” said Louis Kuijs, Asia-Pacific analyst at Oxford Economics
However, imports have struggled to keep pace, suggesting that China’s demand-side recovery is lagging the supply side.
Nonetheless, the world’s largest trading economy has not experienced the sort of collapse in shipments due to sagging demand in developed markets that many feared early in the pandemic. It has perhaps also benefited from being the first industrial economy to be up and running, with its exporters primed to capitalise on the absence of overseas competition.
“Chinese exports outperformed both global trade and this analyst’s own expectations by 20 to 25 per cent in the second quarter,” wrote Tomas Gatley of Gavekal Dragonomics in a note this week, adding that much of the growth was due to weakness in exports elsewhere, as well as Covid-related demands.
South China Morning Post calculations based on the customs data showed that China’s exports to the United States rose by 12.5 per cent in July, while imports from the US rose by 3.6 per cent, despite pressure for Beijing to make astronomical purchases of American goods.This suggests that China has some way to go in meeting its trade deal commitments with the US.Latest data about China’s economy7 Aug 2020Agricultural orders had surged in July, evidenced by record daily and weekly sales of corn and renewed demand for soybeans, but shipments have not followed, analysts said. Meanwhile, China has only met 5 per cent of energy purchase targets over the first half of the year.
China’s total imports of meat surged 94.8 per cent in the first seven months of the year in US dollar value terms, while grain imports rose 16.2 per cent, customs data showed.But even at this rate, there appears to be no chance that China will make its purchase targets for 2020, with analysts quick to remind that these were considered too ambitious in the first place. This could prove a sticking point, as top negotiators prepare to reconvene for high level talks in the next week.
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From March to June, China’s trade was powered by strong shipments of emergency medical equipment and protective gear. These continued to contribute to growth in July, with the Post’s analysis of customs data showing a 78 per cent increase year-on-year in medical device shipments.The pace of that growth had appeared waning before the official customs numbers were released. Analysis from Panjiva Research in July revealed that previously rampant American demand for masks, gowns and ventilators was subsiding, with the US bringing domestic production online for some products and restoring stockpiles for others.