China’s export industry delivered a strong performance last month after spending the first half of the year hampered by a shortage of raw materials and pandemic-related shutdowns at major ports.
Offering an encouraging boost to the economy, outbound shipments grew 18% in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, beating analysts’ expectations for a 15% gain, even as imports remained weak.
Analysts had expected exports to slow amid mounting signs that Europe, the United States, Britain and Australia are headed for recession, dampening the outlook for global consumption.
Foreign trade container cargo to berth at eight major Chinese ports rose 14.5% in July, up from an 8.4% increase in June, according to data released by the Domestic Ports Association.
Container throughput at the Port of Shanghai, one of the hardest hit by Covid-related shutdowns, reached a record high in July.
The export data is likely to encourage Chinese leaders who have come under pressure from a general economic slowdown many have blamed on a weakened property market.
A boom in property development in recent years has resulted in a mountain of debt triggering a wave of bankruptcies across the building and construction industry and related industries.
S&P Global rating agency said last month property sales in China could fall by a third this year, as people lose faith in the market and pressure mounts on developers struggling to complete pre-sold apartments.
China’s central bank has sought to ease lending rules to make soaring property values more affordable and prevent further corporate insolvencies. Local authorities have also expanded new infrastructure projects to increase domestic business activity.
However, many analysts remain skeptical that Beijing can orchestrate a soft landing for the property sector that cushions the economy from the worst effects of a price crash, especially when exports are likely to slow towards the end of the year.
A global factory survey released last week showed demand weakened in July, with orders and output indices falling to the weakest levels since the outbreak of the pandemic in early 2020.
China’s official manufacturing survey, which indicates an imminent and broad-based slowdown in activity, showed that activity slowed last month.
The surge in exports pushed China’s trade surplus to a record $101.3bn (£839m) last month.
But which exports contributed to lifting the figures, weaker imports were also a big factor.
Imports rose 2.3% from a year earlier, compared to June’s even more modest increase of 1%.
Analysts had expected import momentum to pick up in the second half of the year, supported by construction-related equipment and raw materials in the wake of increased infrastructure spending.
According to a meeting last week of the nation’s top economic planners, the economy is in the “critical window” for stabilization and recovery, and the third quarter is “important.”
In the first half of this year, retail sales fell 0.7% from a year earlier, as many consumers were confined to their homes amid strict anti-virus measures.
The National Development and Reform Commission said: “[We should] grasp the time window of the peak construction season in the third quarter, improve work efficiency [and] help create jobs for local people nearby as much as possible.”
Beijing recently signaled it was prepared to miss the government’s growth target of around 5.5% for 2022, which analysts said had looked increasingly unattainable after the economy narrowly avoided contracting in the second quarter.
The International Monetary Fund in late July sharply cut its 2022 growth forecast for China to 3.3% from 4.4% in April, citing Covid shutdowns and the worsening crisis in the country’s property sector.