China posts first import growth since pandemic, exports also up


Beijing has distributed aggressive stimulus packages to support domestic demand, although the resurgence of coronavirus infections around the world has raised questions about the strength of a rebound in global economic activity.

Chinese imports rose 2.7% in June from a year earlier, customs data said on Tuesday, confusing market expectations for a 10% drop. They had dropped 16.7% the previous month.

Exports also unexpectedly increased, up 0.5%, suggesting that global demand is starting to pick up again, as many countries begin to ease the harsh anti-virus measures that have pushed the economy world in its biggest slump in almost 90 years. The analyst had estimated a drop of 1.5% after a drop of 3.3% in May.

"The significant improvement in Chinese imports is an indication of the acceleration of the country's economic recovery, which is mainly due to substantial increases in investment in sectors such as real estate and infrastructure" said Boyang Xue, a Chinese analyst at DuckerFrontier consulting firm.

Indeed, iron ore imports hit their highest level in 33 months in June, trade data showed, fueled by higher shipments by miners and strong demand. Crude oil imports also hit a record high amidst Chinese refiners' bargain hunting as oil prices plummeted.

Martin Rasmussen, Chinese economist at Capital Economics, expects Chinese imports to continue improving, as accelerating fiscal stimulus stimulates domestic demand.

Chinese imports from the United States rose 11.3% in June, reversing the double-digit downward trend seen after the coronavirus epidemic.

"Faced with the challenges of the sudden epidemic, we are still living up to our commitments and implementing the (trade) agreement," customs spokesman Liu Kuiwen told reporters on Tuesday.

US President Donald Trump said on Friday that he was not thinking of negotiating a "phase 2" trade agreement with China because relations between Washington and Beijing have been "severely damaged" due to the coronavirus pandemic and other problems.

China's trade surplus with the United States reached $ 29.41 billion in June, up from $ 27.89 billion in May.

ROSE EXPORTS

The Chinese economy is recovering from a strong 6.8% contraction in the first quarter, but the recovery remains fragile as global demand weakens due to social restrictions and increasing cases of coronavirus. Chinese consumption is also moderate due to job losses and concerns about a second wave of infections.

The country's export performance was not, however, as severely affected by the global slowdown as some analysts feared, although weak orders abroad may weigh on its manufacturers during for the next quarters.

"The reopening of the main western economies and the increased demand abroad for PPE (personal protective equipment) and masks supported Chinese exports in June," said Xue of DuckerFrontier. "In addition, disruptions in production among China's trade competitors have also helped shift some orders to Chinese exporters."

Despite the partial reopening of western economies in recent weeks, some countries are reimposing various lock-in measures to combat a resurgence of cases of coronavirus.

"For the future, the increase in shipments of masks, medical products and homework equipment, which continue to grow at more than 30% year-on-year, will continue to grow "blur and weigh on exports," said Rasmussen of Capital Economics, adding that exports would start contracting again soon.

Worsening US-Chinese relations, shrinking global demand, and disruptions in supply chains are also likely to weigh on long-term business prospects, said the Institute for Advanced Research. Shanghai University of Finance and Economics in a report released on Saturday.

The country's trade surplus for June was $ 46.42 billion (£ 36.99 billion), up from a surplus of $ 62.93 billion in May.

(Additional report by Lusha Zhang Edition by Jacqueline Wong)

By Stella Qiu and Gabriel Crossley

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