China’s export industries performed strongly last month after spending the first half of the year hampered by shortages of raw materials and pandemic-related closures at major ports.
Providing an encouraging boost to the economy, outbound shipments rose 18% in July from a year earlier, the fastest pace this year, official Customs data showed on Sunday, beating analysts’ expectations. 15% gain, although imports remained sluggish.
Analysts had expected exports to decline amid growing signs that Europe, the United States, the United Kingdom and Australia were heading into recession, clouding the outlook for global consumption.
According to data released by the National Ports Association, foreign trade container shipments at eight major Chinese ports rose 14.5 percent in July, accelerating from the 8.4 percent gain in June.
Container throughput at the Port of Shanghai, one of the hardest hit by Covid-related lockdowns, hit a record high in July.
The export data should cheer Chinese leaders who have come under pressure from a general economic slowdown that many have blamed on a weakening real estate market.
A property development boom in recent years has resulted in a mountain of debt triggering a wave of bankruptcies in construction and related industries.
Ratings agency S&P Global said last month that property sales in China could fall by a third this year as people lose faith in the market and pressure mounts on struggling developers to complete contracts. pre-sold apartments.
China’s central bank has sought to ease borrowing rules to make sky-high real estate values more affordable and prevent further corporate insolvencies. Local governments have also expanded new infrastructure projects to boost national business activity.
However, many analysts remain skeptical. Beijing can orchestrate a soft landing for the real estate sector that cushions the economy from the worst effects of lower prices, especially when exports are expected to slow towards the end of the year.
A global factory survey released last week showed demand weakened in July, with orders and production indices falling to their weakest levels since the pandemic began in early 2020.
Indicating an imminent and widespread slowdown in activity, the official survey of China’s manufacturing sector showed that activity contracted last month.
Soaring exports pushed China’s trade surplus to a record $101.3bn (£839m) last month.
However, while exports played a role in driving up the numbers, weak imports were also a significant factor.
Imports rose 2.3% from a year earlier, compared to the even more modest gain of 1% recorded in June.
Analysts expect import momentum to pick up in the second half of the year, supported by construction-related equipment and raw materials in the wake of increased infrastructure spending.
According to a meeting last week of the country’s top economic planners, the economy is in the “critical window” for stabilization and recovery, and the third quarter is “vital”.
In the first half of this year, retail sales fell 0.7% from a year earlier as many consumers were confined to their homes under strict anti-virus measures.
The National Development and Reform Commission said: “[We should] seize the peak season time window for construction in the third quarter, improve work efficiency [and] help create as many jobs as possible for local people nearby.
Beijing recently signaled it was poised to miss the government’s growth target of around 5.5% for 2022, which analysts said looked increasingly out of reach after the economy narrowly avoided a contraction in the second trimester.
In late July, the International Monetary Fund sharply cut its growth forecast for China in 2022 to 3.3% from 4.4% in April, citing Covid lockdowns and a worsening crisis in the country’s property sector. .