China exports and imports fall in June, but trade surplus rises

China's 1.3 billion consumers have remained a bright spot for the economy. According to an analyst, consumption is holding up relatively well, possibly reflecting the effects of income and value-added tax cuts. PHOTO: AGENCE FRANCE-PRESSE
China's 1.3 billion consumers have remained a bright spot for the economy. According to an analyst, consumption is holding up relatively well, possibly reflecting the effects of income and value-added tax cuts. PHOTO: AGENCE FRANCE-PRESSE

BEIJING • China's exports last month fell 1.3 per cent from a year earlier, Customs data showed yesterday, but the drop was less than expected amid mounting pressure from United States tariffs.

Analysts surveyed by Reuters had tipped exports to fall 2 per cent from a year earlier, after May's data showed an unexpected increase of 1.1 per cent.

While China is not as dependent on exports as in the past, they still account for nearly a fifth of its gross domestic product.

Imports last month fell 7.3 per cent from a year earlier, sharper than a 4.5 per cent decline tipped by analysts but less than the 8.5 per cent drop in May.

That left China with a trade surplus of US$50.98 billion (S$69.3 billion) last month, compared with a US$41.66 billion surplus in May. Analysts had forecast a surplus of US$44.65 billion for June.

China's trade surplus with the United States, a major source of friction with its biggest trading partner, rose to US$29.92 billion last month from US$26.9 billion in May.

For the first half of this year, China's trade surplus with the US was US$140.48 billion, compared with US$133.76 billion in the same period last year.

The persistently strong surplus is one of the main issues in the year-long trade war between the two economic giants, which is increasingly weighing on businesses on both sides of the Pacific and dragging on the global economy.

This comes as China's economy grew at its slowest rate in nearly three decades in the second quarter, according to an AFP survey of analysts.

The world's second-largest economy expanded 6.2 per cent in April-June, the poll of 10 economists predicted ahead of the official release of gross domestic product figures on Monday.

The reading would mark the worst quarterly growth in almost three decades but stay within the government's target range of 6.0-6.5 per cent for the whole year. The economy grew 6.6 per cent last year.

Beijing has stepped up support for the economy this year but the moves have not been enough to offset a domestic slowdown and a softening overseas demand for its toys, gadgets and electronics.

  • 7.3%

    Fall in imports last month from a year earlier - sharper than a 4.5 per cent decline tipped by analysts but less than the 8.5 per cent drop in May.

Beijing pushed forward a raft of stimulus measures earlier this year to cushion the impact from its cooling economy, increasing spending on roads, railways and other big-ticket infrastructure projects, as well as tax cuts worth 2 trillion yuan (S$395.1 billion) kicking in from April.

The policies buoyed the economy in March and brought in 6.4 per cent growth for the first quarter, but it proved no more than a short-term panacea.

Industrial output surged 8.5 per cent in March before tumbling in April and dropping to a 5 per cent growth in May, the slowest increase since 2002.

The growth in infrastructure investment has also retreated from the first quarter, coming in at 4 per cent in January-May, sharply down from years of near 20 per cent expansion.

China's 1.3 billion consumers have remained a bright spot.

"Consumption is holding up relatively well, possibly reflecting the effects of income and value-added tax cuts," said Mr Tommy Wu of Oxford Economics.

REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on July 13, 2019, with the headline 'China exports and imports fall in June, but trade surplus rises'. Print Edition | Subscribe