- China’s exports unexpectedly grew in July despite trade war fears.
- It appears most of the rebound reflected trade with non-US countries such as Taiwan, South Africa, and Brazil.
- Chinese imports from the US fell 19% in July, while exports to the US fell 6.5%.
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China’s exports unexpectedly grew in July despite its trade war with the US, showing the world’s second-largest economy is pushing on without America.
Exports rose 3.3% year-on-year in dollar terms, a bounce back from the 1.3% decline in June, according to Chinese customs data. Much of this was driven by growth in exports to Southeast Asia, as trade was redirected from China to other countries.
“Like it or not, as the largest trading country in the world, China is well-ingrained into global supply chains,” Dr. Kerstin Braun, president of trade finance provider Stenn, said in an email to Markets Insider. “Trade from China will find a way to reach the US, either from rerouting shipping through countries like Vietnam, Thailand, Cambodia or Indonesia, or from Chinese direct investment in Southeast Asia, which is on the rise.”
Chinese shipments to America dropped almost 7%, according to Bloomberg. Meanwhile, exports to Taiwan, South Africa, and Brazil posted double-digit growth.
“The pickup was mostly driven by stronger exports to non-US countries. The contraction in exports to the US did moderate slightly but this still implies that the drag from US tariffs continued to intensify last month,” Capital Economics said in an analysts note.
Capital Economics also noted that the depreciation of the yuan should aid Chinese exports. “A weaker renminbi will also offer some welcome relief to Chinese exporters. The prop to export volumes will probably be small – USD export prices tend to be sticky and in recent years firms have absorbed around 80% of the movement in the exchange rate.
“But what doesn’t get passed on to buyers will flow through to local currency export revenues, which in turn will help to support manufacturing employment, investment and income growth. Via this channel alone, a 10% depreciation could boost GDP by around 0.2%.”
Meanwhile, Chinese trade with the US posted further declines. China’s imports from the US fell 19% in July from last year, while exports fell 6.5%, resulting in a $US27.97 billion trade surplus for China.
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