China records first import growth since pandemic, exports also increased

BEIJING (Reuters) – China’s imports in June rose for the first time since the coronavirus crisis paralyzed the economy this year as demand for commodities increased as a result of government stimulus, while exports also increased by a a sign that the recovery is gaining ground.

Beijing has distributed aggressive stimuli to support domestic demand, even as the resurgence of coronavirus infections worldwide has cast doubt on the strength of a rebound in global economic activity.

China’s imports in June increased 2.7% from a year earlier, customs data showed on Tuesday, confounding market expectations of a 10% drop. They had fallen 16.7% the previous month.

Exports also rose unexpectedly, by 0.5%, suggesting that global demand is starting to rebound again as many countries begin to ease anti-virus measures that have driven the world economy into its biggest slump in nearly 90 years. The analyst had estimated a 1.5% drop after a 3.3% drop in May.

“The significant improvement in China’s imports is an indication of the country’s accelerated economic recovery, which has been mainly driven by substantial increases in investments in sectors such as real estate and infrastructure,” said Boyang Xue, a China analyst at the consultancy. DuckerFrontier.

In fact, iron ore imports peaked in 33 months in June, trade data showed, fueled by increased miners’ shipments and strong demand. Crude oil imports also hit a record high amid Chinese refineries’ search for bargains when oil prices collapsed.

Martin Rasmussen, a Chinese economist at Capital Economics, expects China’s imports to continue to improve as an increase in fiscal stimulus boosts domestic demand.

China’s imports from the United States increased 11.3% in June, reversing a double-digit downward trend seen after the coronavirus outbreak.

“Faced with the difficulties of the sudden epidemic, we are still honoring our commitments and implementing the (trade) agreement,” customs spokesman Liu Kuiwen told reporters on Tuesday.

United States President Donald Trump said Friday that he was not thinking of negotiating a “Phase 2” trade agreement with China, as relations between Washington and Beijing have been “severely damaged” due to the coronavirus pandemic. and other problems.

China’s trade surplus with the United States expanded to $ 29.41 billion in June from $ 27.89 billion in May.

EXPORT ROSES

China’s economy is recovering from a sharp contraction of 6.8% in the first quarter, but the recovery remains fragile as global demand falters due to social constraints and rising coronavirus cases. Chinese consumption has also declined amid job losses and concerns about a second wave of infections.

However, the country’s export performance has not been as badly affected by the global slowdown as some analysts feared, although weak orders abroad may affect its manufacturers in the coming quarters.

“The reopening of major western economies and high overseas demand for PPE (personal protective equipment) and masks supported Chinese exports in June,” said Xue of DuckerFrontier. “In addition, disruptions in production from China’s commercial competitors also helped transfer some orders to Chinese exporters.”

Despite the partial reopening of western economies in recent weeks, some countries are reimposing various blocking measures to combat the resurgence of coronavirus cases.

“Looking to the future, the momentum of shipments of masks, medical products and home work equipment, which are still growing at more than 30% y / y, will continue to fade and weigh on exports,” said Rasmussen of Capital Economics, adding that exports would begin to contract again in a short time.

Worsening U.S.-China relations, reduced global demand and disruptions in supply chains may also put pressure on long-term business prospects, the University of Finance and Economics Advanced Research Institute said Saturday. from Shanghai.

The country’s trade surplus for June was $ 46.42 billion, compared to a surplus of $ 62.93 billion in May.