China’s exports rose at their fastest pace in five months in June as factories revved up after the lifting of COVID lockowns, but a slowdown in imports, fresh virus flare-ups and a darkening global backdrop pointed to a bumpy road ahead for the economy.
Analysts say the rebound in exports reflects the easing of supply chain disruptions and port congestion that hammered the economy in spring when the government rolled out widespread lockdowns.
Outbound shipments in June rose 17.9% from a year earlier, the fastest growth since January, official customs data showed on Wednesday, compared with a 16.9% gain seen in May and much more than analysts’ expectations for a 12.0% 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 earlier been severely affected by a lockdown, had recovered to at least 95% of year-earlier levels, according to official data.
Exports of autos contributed to the robust growth. China exported 248,000 vehicles in June, up 30.5% 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 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.
