China: Exports kept the solid performance - UOB

Economist at UOB Group Ho Woei Chen, CFA, assesses the latest trade balance figures in China.

Key Takeaways

“The lifting of COVID-19 lockdowns in Shanghai further boosted China’s exports in Jun but imports grew at a slower than expected pace which raised concerns of weaker domestic demand. China’s imports remained weighed down by weaker domestic demand for planes, motor vehicles, vegetable oil, iron ore and steel products, and mechanical & electrical products.”

“As a result, trade surplus surged to record high at US$97.94 bn from US$78.76 bn in May.”

“In the first half of 2022, export and import were up 14.2% y/y and 5.7% y/y respectively. Looking ahead, global demand could be sapped by tightening monetary policy, high inflation and increasing uncertainties. Meanwhile, domestic COVID-19 resurgence could pose disruption to China’s trade flows but we think the worst could be over as the government looks for a more balanced approach to manage economic and health risks from COVID-19.”

“Given the high comparison base in 2021 when China’s export and import rose 29.9% and 30.1% respectively, we expect a more moderate growth of 10-12% for export and around 5% for import this year.”