China: Trade data surpassed expectations in June – UOB

Ho Woei Chen, CFA, Economist at UOB Group, assessed the latest Chinese trade data for the month of June.

Key Quotes

“China’s exports and imports beat consensus expectation, with both posting gains in June. In USD-terms, exports were up 0.5% y/y from -3.3% y/y in May while imports rebounded 2.7% y/y from -16.7% y/y in May, its first expansion in four months. The stronger rebound in imports resulted in the narrowing of China’s trade surplus to US$46.42 billion from US$62.93 in May.”

“Overall, China’s exports rebounded to a growth of +0.1% y/y in 2Q from -13.3% y/y in 1Q but the imports contraction worsened to -9.7% y/y from -2.9% y/y in 1Q. At the half-year mark, China’s trade surplus stood at US$167.80 billion YTD compared to US$176.67 billion in 1H19.”

“In the first half, China’s exports and imports with the US contracted by -11.1% y/y and - 4.4% y/y respectively. Against China’s YTD exports (-6.2% y/y) and imports (-7.1% y/y) performance, we note that the contraction in exports to the US was sharper. Although China’s imports from the US fell, the decline was less compared to China’s total imports contraction YTD.”

“Bloomberg had estimated that China only met 1/5 of its merchandise imports commitments in the first five months of the year under the Phase One trade deal. Under the agreement, China commits to increase purchase of US products (manufacturing, energy and agriculture) and services by at least US$200 bn over the next two years (with 2017 as the base year for comparison), of which US$77 bn increase is targeted for 2020. US-China tensions remain one of the key risk factors for China’s trade outlook in the remainder of this year and beyond.”