China’s foreign trade momentum further improved despite supply chain headwinds

LONDON — China’s exports and imports momentum have both improved in June, shrugging off the impact of supply chain headwinds, British think tank Oxford Economics said in a report released on July 13.

“Exports surprised on the upside in June…We expect export volumes to return to sequential growth in H2 (second half of the year) following the recent softness,” said the report.

Apart from the exports, the British think tank also said China’s sequential import momentum improved in June, adding that “we expect imports will continue to expand sequentially in H2 as domestic growth momentum gains pace beyond the current soft patch.”

The report came as China’s official data showed earlier in the day that the country’s imports and exports in June rose by 22 percent year-on-year to 3.29 trillion yuan (about $0.5 trillion), marking an increase for the 13th month in a row.

Notably, China’s foreign trade surged by 27.1 percent year-on-year to 18.07 trillion yuan (about $2.79 trillion) in the first half of the year (H1), the best performance in history, China’s General Administration of Customs (GAC) said.

Despite near-term headwinds facing China’s shipments and other factors, the British think tank said strong global import demand will continue to underpin the export of the world’s second largest economy through this year.

“China’s role in global supply chains remains intact and strong demand for electronics should persist,” said Oxford Economics.

“More generally, we think global demand will continue to support China’s export outlook, especially as we expect global supply chain disruptions to be resolved gradually in the coming months,” it added.

Speaking of China’s domestic growth momentum in H2, the Oxford Economics said it believes China’s corporate investment is improving and the uptrend will continue, “supported by better profitability and business confidence as well as policy support to SMEs (small and medium-sized enterprises), advanced manufacturing, and strategic high-tech industries.”

“We also expect consumption to pick up in H2 as consumers become more comfortable with public health conditions and their own economic situation,” said the report.

According to China’s official data, trade with its top three trading partners — the Association of Southeast Asian Nations, the European Union, and the United States — maintained sound growth in H1.

During the period, the growth rates of China’s trade value with the three trading partners stood at 27.8 percent, 26.7 percent and 34.6 percent, respectively.

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