China Economy

China's June exports growth beats forecast as easing global lockdowns boost demand

An aerial view of the Yangshan container port in Shanghai, China on July 10, 2021.
Feature China | Barcroft Media | Getty Images

China's exports grew at a much faster than expected pace in June as solid global demand led by easing lockdown measures and vaccination drives worldwide eclipsed virus outbreaks and port delays.

Imports growth also beat expectations, though the pace eased from May, with the values boosted by high raw material prices, customs data showed on Tuesday.

Thanks to Beijing's efforts in largely containing the pandemic earlier than its trading partners, the world's biggest exporter has managed a solid economic revival from the coronavirus-induced slump in the first few months of 2019.

Exports in dollar terms rose 32.2% in June from a year earlier, compared with 27.9% growth in May. The analysts polled by Reuters had forecasted a 23.1% increase.

"Exports surprised on the upside in June, shrugging off the impact of the temporary Shenzhen port closure and other supply chain bottlenecks," said Louis Kuijs, head of Asia economics at Oxford Economics.

"The headline US$ numbers suggest that in real, sequential terms shipments held up in June, after having moderated earlier on from the record levels of end-2020."

China's trade performance has seen some pressure in recent months, mainly due to a global semiconductor shortage, logistics bottlenecks, higher raw material and freight costs.

All the same, the global easings in COVID-19 lockdown measures and vaccination drives appeared to underpin a strong uptick in worldwide demand for Chinese goods.

The strong shipment numbers last month underlined some solid factory surveys overseas. A measure of U.S. factory activity climbed to a record high in June, while Euro zone business growth accelerated at its fastest pace in 15 years.

The data also showed imports increased 36.7% year-on-year last month, beating a 30.0% forecast but slowing from a 51.1% gain in May, which was the highest growth rate in a decade.

China's export engine may slow down in the second half of 2021: HSBC
China's export engine may slow down in the second half of 2021: HSBC

Pandemic uncertainties

China's customs administration spokesperson Li Kuiwen said the country's trade may slow in the second half of 2021, mainly reflecting the statistical impact of the high growth rate last year.

Li, speaking at a news conference in Beijing earlier in the day, also said that imported inflation risks were manageable though China's trade still faces uncertainties due to the global pandemic.

"But overall we think China's foreign trade in the second half still has hopes of achieving relatively fast growth," he said.

China posted a trade surplus of $51.53 billion for last month, compared with the poll's forecast for a $44.2 billion surplus and the $45.54 billion surplus in May.

The world's second largest economy has contained a sporadic coronavirus outbreak in one of its major export hubs in southern Guangdong province last month.

However, exporters are grappling with higher raw material and freight costs and logistics bottlenecks.

Prices for commodities such as coal, steel, iron ore and copper have surged this year, fueled by easing pandemic lockdowns in many countries and ample global liquidity.

China's trade surplus with the United States swelled to $32.58 billion in June, Reuters calculations based on customs data showed, up from the May figure of $31.78 billion.

Top officials from China and the United States started exchanges in June to address mutual concerns, while the Biden administration is conducting a review of trade policy between the world's two biggest economies, ahead of the expiry of their Phase 1 deal at the end of 2021.

Beijing has started to purchase corn from the United States in June, while it still falls well behind its pledge in Phase 1 deal to buy more agriculture products from the United States.