GLOBAL RISKS "SHOWING" CHINA'S TRADE PROSPECT

Although China's exports grew at the fastest pace in five months in June 2022, import activity slowed due to new outbreaks and a less optimistic global landscape.

Containers of Chinese goods waiting to be unloaded at the port of Long Beach, Los Angeles

According to observers, although China's exports in June 2022 increased at the fastest rate in five months, import activity slowed due to new outbreaks of epidemics and the less optimistic global context for the country sees a bumpy road ahead for the world's second-largest economy.

The latest data from the General Administration of Customs of China (GAC) shows that the volume of goods exported in June increased by 17.9% year-on-year. This was the fastest growth since January 2022, higher than the 16.9% increase in May and well above analyst expectations of 12%.

Economist Heron Lim of market research firm Moody's Analytics said that the reopening of the Shanghai business center in June (after being locked down for two months to prevent a new wave of COVID-19 infections) helped to improve the backlog.

Generally, in the first half of this year, China's foreign trade in goods increased by 9.4% over the same period last year, to 19,800 billion Yuan (about 2.94 trillion USD). Exports in the same period increased 13.2% to 11,140 billion Yuan, while imports increased 4.8% to 8,660 billion Yuan.

Due to the improvement of the COVID-19 epidemic prevention and control situation and the effect of growth-supportive policies, China's foreign trade enterprises have started to return to work and go into production from May 2022.

Li Kuiwen, spokesman for GAC, said the rapid recovery in import and export activities in the Yangtze River Delta has led to a significant recovery in the overall growth of foreign trade in China. . However, slowing imports have raised questions about the strength of this recovery.

Imports in June rose just 1% year-on-year, slowing from May's 4.1% increase and well below analyst expectations for a 3.9% increase. This weakness is mainly due to the previous blockade orders and reduced domestic consumption.

Almost all of China's imports fell significantly more. Daily crude oil imports in June fell 11% year-on-year to their lowest level since July 2018, while coal imports fell 33%.

Julian Evans-Pritchard, senior China economist at financial consulting firm Capital Economics, noted that China's import volumes fell to a three-year low in June.

This shows that the weakness in the construction sector is still lingering, which is often a significant growth engine of the world's second-largest economy.

The expert also added that cooling global demand may also soon ease China's export boom during the epidemic season.

Currently, China is the only major economy that still maintains the "Zero COVID" strategy with rapid closures and long-term isolation, thereby greatly affecting business activities and inhibiting the recovery of consumption.