Chinese exports rise at fastest pace in more than a year

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China’s exports grew at the fastest pace in more than a year last month, with trade remaining a rare bright spot for the world’s second-largest economy despite rising tensions with Europe and the United States.

Exports rose 8.6 percent year-on-year in dollar terms in June, according to data released on Friday by the National Bureau of Statistics, an acceleration from 7.6 percent in May and the strongest expansion since March 2023. The figure beat expectations: a Reuters poll of analysts had forecast growth of 8 percent.

Imports fell by 2.3 percent year-on-year in June, significantly lower than economists’ forecasts of 2.8 percent growth and 1.8 percent expansion in May.

The figures put China’s trade surplus at $99.05 billion, higher than forecasts of $85 billion and a single-month record, according to analysts at Goldman Sachs. In the first six months of the year, exports rose 3.6 percent and imports rose 2 percent compared with the same period in 2023.

Policymakers in Beijing have increasingly relied on exports and manufacturing as the Chinese economy struggles with weak domestic demand and a prolonged slowdown in the real estate sector. The Communist Party leadership is preparing for a closely watched economic policy meeting starting Monday.

Trading partners in the US and Europe have responded to the rise in cheap Chinese exports by tightening trade restrictions.

The US announced in May that it would significantly increase tariffs on $18 billion worth of Chinese imports, including 100 percent duties on Chinese electric vehicles. In June, the EU announced additional measures that would increase tariffs on Chinese electric vehicles to nearly 50 percent.

Continued strong exports alongside relatively weak imports point to a lopsided economic recovery, analysts said. Growth in Chinese consumer prices slowed in June, rising just 0.2 percent year-on-year, while factory prices remained in deflationary territory for the 21st straight month.

Some experts have suggested that the surge in Chinese exports in recent months may be due to manufacturers bringing forward their products to avoid expected US tariff increases, which take effect in August.

The disruption of shipping routes through the Red Sea by Houthi militants in Yemen has prompted some Chinese exporters to ship their goods early to ensure they can be delivered in time for the busy Christmas period.

“Exports brought forward amid rising trade policy uncertainty may also have supported exports at the margin, although it is difficult to quantify its contribution,” Goldman analysts wrote in a note.

In previous years, the Chinese Communist Party’s Central Committee has used the Third Plenary Session to discuss pressing economic issues. Some observers have called for tougher measures to boost domestic demand and restore business and investor confidence.

But China’s premier, Li Qiang, has tempered expectations for drastic measures, telling a meeting of the World Economic Forum last month that the country’s economy should be allowed to “gradually recover.”

Lynn Song, chief economist for Greater China at ING, noted that export growth was driven by shipments of cars and semiconductors, while imports fell due to agricultural products and goods related to real estate such as timber and steel.

“Import growth has been very uneven so far this year,” he said, adding that US and EU tariffs could cause a slowdown in auto exports towards the end of this year.

But analysts at Capital Economics predicted the tariffs, which cover only a small portion of Chinese goods, would have a limited impact in the short term as exporters reroute shipments. “Overall, we expect exports to remain a tailwind for economic growth in the near term,” they wrote.