According to Nikkei Asia on August 7, official customs data show that China’s exports rose 18% in July from a year ago, 0.1% up from June. However, many analysts have projected exports would weaken while the global economy is likely to face a serious downturn in the coming months.
A global manufacturing survey released last week indicated a decline in demand last month. Orders and output indexes hit their lowest since the COVID-19 pandemic started in 2020.
Data from the Chinese National Bureau of Statistics showed manufacturing activity fell to 49.0 in July from 50.2 in June. The 50-point mark Purchasing Managers Index (PMI) separates growth from contraction every month. Below the 50 PMI reflects contraction while above means growth.
In addition, Chang Ran, a senior analyst at Zhixin Investment Research Institute, told the outlet that the volume of exported products tumbled last month, despite high export growth driven by high prices.
He said, “Looking ahead in the second half of the year, exports are expected to be resilient in the short run, but weakening external demand may pressure them in the fourth quarter.”
Bloomberg noted that exports would not be able to contribute much as an essential factor in China’s growth during the pandemic due to external uncertainties, including a global economic slowdown and high inflation within developed countries such as the U.S., U.K, Europe, and Australia.
Jin Chaofeng, general manager at Nicesoul, one of Amazon’s top rattan outdoor furniture vendors, told Reuters, “I am very worried about the impacts of soaring U.S. inflation and rising China-U.S. tensions on our export orders.”
He added, “If retaliatory tariffs like those in the Trump-era happened again, it would deal a blow to our businesses,”
According to Nikkei Asia, most analysts also had expected China’s imports to recover in the second half of this year, but imports last month were weaker than expected, indicating still-soft domestic demands.
Imports jumped 2.3% from last year, lower than a prediction of 3.7% rise.
Imports of crude oil in July dropped 9.5% over the same period last year. Reuter’s calculations show that integrated circuits, a major Chinese import, plummeted 19.6% in July.
Nikkei Asia noted that weaker imports might also be a red flag for China’s exports as the country tends to re-export a large number of imports abroad.
Recently, top Chinese leaders have signaled that they would likely miss the government’s annual growth target of around 5.5% this year.
In late July, the IMF downgraded its China’s 2022 growth forecast to 3.3% from 4.4% in April, citing Covid strict lockdowns and the ailing property sector in the country.