Slowdown in Chinese exports in July could signal more hurdles to come

BEIJING, Aug.7 (Reuters) – China’s export growth unexpectedly slowed in July following outbreaks of COVID-19 cases, while imports also lost momentum, indicating a slowdown in the The country’s industrial sector in the second half of the year, even as the easing of global lockdowns boost trade.

The world’s largest exporter staged an impressive economic rebound from a coronavirus-induced crisis in the first months of last year after quickly containing the pandemic, and its rapid rollout of vaccination has helped build confidence.

But new infections in July, mainly caused by the highly transmissible Delta strain, spread to dozens of Chinese cities, prompting local authorities to lock down affected communities, test millions of people and temporarily suspend operations. some companies, including factories.

Seasonal flooding and inclement weather over the past month have also affected industrial production in parts such as central China. Read more

Exports in July were up 19.3% from the previous year, compared with a gain of 32.2% in June. Analysts polled by Reuters had expected a gain of 20.8%.

“The pandemic has worsened in other developing countries in Asia, which may have led to a relocation of trade to China. But key indicators suggest that exports may weaken in the coming months,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Outbreaks of COVID-19 cases in the eastern and southern provinces of China, the country’s main export centers, have reduced output at factories.

In addition to hampering efforts to counter the spread of the Delta variant, Chinese exporters have also faced a global semiconductor shortage, logistics bottlenecks, and higher raw material and freight costs. .

“Although orders are picking up, there are too many uncertainties in the second half of the year, such as the development of the national epidemic and the cost of raw materials. And at the same time, foreign production capacity is slowly recovering,” said an export manager. Suzhou-based sales manager nicknamed Ye.

Imports in July grew 28.1% slower than a year earlier, lagging behind a 33% increase predicted in the Reuters poll and growth of 36.7% the month before. Demand has fallen in recent months for iron ore, a key ingredient in the steel industry.

China’s crude oil imports, however, rebounded in July after a six-month low as state-backed refiners ramped up production after maintenance returned.

Chinese factories grew at a slower pace in July due to rising costs for raw materials, equipment maintenance and extreme weather conditions.

The slowdown in Chinese shipments also reflected the moderation of business in the United States in July amid supply constraints, suggesting a cooling of the world’s largest economy after what should have been a robust second quarter. Read more

China posted a trade surplus of $ 56.58 billion in July, compared to the poll’s forecast for a surplus of $ 51.54 billion and $ 51.53 billion in June.

Its trade surplus with the United States reached $ 35.4 billion, according to Reuters calculations based on customs data, from $ 32.58 billion in June.

The economy is set to grow by more than 8% this year, but analysts say pent-up demand for the coronavirus has peaked and forecast growth rates to begin to moderate.

For a breakdown of China’s trade with major trading partners, click

Reporting by Colin Qian, Gabriel Crossley and the Beijing Newsroom; Editing by Jacqueline Wong

Our Standards: Thomson Reuters Trust Principles.