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China’s trade improved in June in a new sign that the world’s second-largest economy is recovering from the coronavirus pandemic. But its exporters face threats that include tension with Washington and a possible drop in demand from the United States and Europe.
Chinese imports rose 3 percent from a year earlier to $ 167.2 billion, rebounding from the 3.3 percent drop in May, customs data showed on Tuesday. Exports increased 0.4 percent to $ 213.6 billion, an improvement from the 16.7 percent contraction the previous month.
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Imports of US goods rose 10.6 percent to $ 10.4 billion despite increases in tariffs in a fight with Washington over trade and technology. Exports to the United States increased 1 percent to $ 39.8 billion.
China, where the pandemic began in December, was the first economy to start the fight to revive normal business activity in March after declaring the virus under control. Manufacturing is recovering, but consumer spending is weak. Forecasters say exports are likely to decline as demand for masks and other medical supplies declines and American and European retailers cancel orders.
The main indicators “suggest that exports will start to contract again in a short time,” Martin Rasmussen of Capital Economics said in a report.
Relations with the United States, China’s largest national export market, have deteriorated to their lowest level in decades.
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The disputes over Hong Kong, human rights, and the South China Sea added to tensions that started with a tariff war launched by the Trump administration in 2018 over technological ambitions and Beijing’s trade surplus.
The two sides have announced sanctions against some prominent political figures from China and the United States in a dispute over abuses in the northwestern region of Xinjiang, although it is unclear whether those officials will be affected.
President Donald Trump said Friday that working on the second stage of an agreement aimed at ending the tariff war is of low priority because relations were “severely damaged” by Beijing’s handling of the pandemic.
The two sides signed a “phase one” agreement in January to postpone new sanctions, but the already imposed rate increases remained in place.
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China’s imports in June were buoyed by a 74 percent increase in purchases of US soybeans under a Beijing commitment in that January deal to reduce its trade surplus with the United States by importing more food and other goods.
“China’s imports from the United States are likely to remain high in the second half of this year,” Nomura economists said in a report.
U.S.-made semiconductor imports accelerated to 18.6 percent growth from a year earlier, which Citigroup economists suggested could have been prompted by concerns that U.S. export sanctions imposed on the giant Chinese tech Huawei Technologies Ltd. will be fully implemented once a temporary postponement ends.
Imports “should continue to rise” as the government spends more to support economic recovery and consumer demand, Rasmussen said.
China’s global trade surplus narrowed to $ 46.4 billion from $ 62.9 billion in May.
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The Chinese economy contracted 6.8 percent in the first quarter, its worst performance since at least the mid-1960s. The ruling party skipped the announcement of an annual economic growth target, but private sector forecasts range from low single digits to a small contraction.
Some forecasters slightly raised their outlook after the factory’s activity in May improved more than expected.
