China has continued to record unprecedented economic growth in its fight for recovery from the ravages of coronavirus. China’s exports in July saw a surge spurred by lockdown goods demands from around the world.
The outbound shipment rose 7.2 percent from last year. The surprising record was powered by rising overseas demands for medical supplies and goods needed during lockdowns.
The surge came after exports witnessed minor growth at 0.5 percent in June. But imports fell back at 2.7 percent at the same period.
Data released by the Chinese Customs Administration on Friday showed that imports contracted by 1.4 percent a year earlier in US dollar terms, worse than it was projected by analysts.
SCMP reported that China’s trade balance for July stood at $62.33 billion, an increase from $46.2 billion in June.
Economists said the growth has been masterminded by shipment of medical supplies to other countries still under the scourge of coronavirus. And as economies gradually open the need to fill the vacuum of exhausted non-medical supplies, (especially electronics) saw Chinese export of goods increase in the second quarter.
“In July, the export strength was largely driven by electronics – especially ‘automatic data processing equipment,’ mobile phones, household appliances, audio and video devices – and high-tech products, with traditional categories like plastic and textile also contributing well,” said Louis Kuijs, Asia-pacific analyst at Oxford Economies.
China is reaping the benefits of its strict approach to COVID-19 pandemic’s containment. The Southeast Asian giant started opening its industries and services early, as soon as there was significant decline in the hard hit cities, particularly Wuhan. The early recovery placed China in the position to export supplies to countries contending with emerging cases of the virus.
However, as economies around the world begin to open, supply demand of depleted goods surged, especially household items, pushing many countries to import from China, as it appears to be the only economy functioning in the capacity to meet the demands.
But in a poll conducted by Bloomberg, a group of economists had predicted that Chinese exports would experience 0.7 percent plunge in dollar terms while import is expected to rise by 0.8 percent.
While there has been significant progress in the global supply chain, Chinese shipment has been hit with near collapse situations due to decline in demand from developed markets.
However, SCMP reported that China’s exports to the United States rose by 12.5 percent in July, while imports from the US rose by 3.6 percent, even though there’s pressure from Washington on Beijing to close the trade deficit. Most of US’ companies are still struggling to get back to business, which gives China’s export an edge.
Orders for agricultural products went up in July, as demand for corn and soybean rose. Analysts said the surge does not reflect in shipment, which means the products were consumed locally.
Meanwhile, there has been a decline in purchase of energy that China is struggling to meet 5 percent of its target in the energy sector. Two commodities it has witnessed import surge are meat and grain that rose 94.48 percent and 16.2 percent respectively in the first seven months of the year, according data from Chinese Customs.
Nevertheless, the sustainability of the export surge is not certain as it depends mainly on medical supply. For the second quarter of the year, supply of medical equipment and protective gear resuscitated the export. By July, there has been a 78 percent increase year-on-year in shipment of medical devices.
Notwithstanding, the shipments are beginning to plunge as more countries curtail coronavirus, lift lockdowns and open economies, and local products are appearing more on virtual markets. Analysts at Panjiva Research said US seaborne shipments of ventilators, gowns, masks, and goggles all fell in July compared to June, even though many states are still recording spikes in the number of coronavirus cases.
Panjiva said that US import of ventilators nosedived 26.6 percent in July from June, upon the previous record of 0.8 percent dip from May to June.
Beijing will meet Washington around August 15 to discuss their trade deal. Part of the agreement is that their progress will be assessed every six months to determine the future of the deal. With China lagging in its import quota from the United States, and Donald Trump blaming the current American economic situation on ‘China virus,’ the deal may take a new turn.