China’s exports dip in July; trade surplus narrow

China’s foreign trade data for July again underlined the headwinds the world’s second largest economy is facing. The growth of exports was not just three-month low but also missed expectations and added to concerns about the vast manufacturing sector.

Exports rose 7 per cent in July on a year-to-year basis, but were slower than June’s 8.6 per cent. The forecasts had suggested a 9.7 per cent increase. “Due to base effect, China’s exports may keep a single-digit growth in the near future, but considering the slowing external demand and tariffs, the outbound shipments in the second half of 2024 will face bigger pressure,” Reuters quotes Lynn Song, chief economist for Greater China at ING, as saying.

China’s trade surplus narrowed to $84.65 billion in July, compared with the $99 billion forecast and $99.05 billion recorded in June. The United States has repeatedly highlighted the surplus as evidence of trade advantages enjoyed by Chinese firms.

Imports climbed 7.2 per cent rate, reversing a 2.3 per cent dip in June, making the strongest performance in three months. It also beat analysts’ expectations of a 3.5 per cent rise.

Higher imports are attributed to Chinese firms’ rush to purchase chips ahead of expectations of further United States curbs on chips exports to the Asian giant, said Xing Zhaopeng, senior China strategist at ANZ. “Looking ahead, the upward trade cycle may have ended. Both imports and exports are expected to slow down in the third quarter.”

China has struggled to gain momentum despite government efforts to stimulate domestic demand following the pandemic. A protracted property slump and fears about job security have dragged heavily on consumer confidence.

China’s economy grew 4.7 per cent in the second quarter, below expectations.

Chinese leaders pledged last week that the stimulus measures will be directed at consumers.

The slowdown in export growth adds to concerns about the outlook for the sector, analysts say, with many countries growing increasingly uneasy about China's trade dominance.

The US, Europe, and emerging economies from Turkey to Indonesia have raised tariffs and placed other barriers on Chinese products.

Washington announced in May plans to raise tariffs on an array of Chinese products on August 1 but decided it would delay some of them.

Chinese tech giants including Huawei and Baidu as well as startups have ramped up purchase of high bandwidth memory semiconductors to stockpile in anticipation of US curbs on exports of the chips to China, Reuters reported on Tuesday.