China's export growth gains steam despite weakening global demand

China's export growth unexpectedly picked up speed in July, offering an encouraging boost to the economy as its struggles to recover from a sharp, Covid-induced slump, though imports remained sluggish.

Outbound shipments grew 18.0 per cent in July from a year earlier, the fastest pace this year, official customs data showed on Sunday, compared with a 17.9 per cent rise in June and beating analysts' expectations for a 15.0 per cent gain.

Analysts had expected exports to fade amid growing signs of cooling global consumption.

A global factory survey released last week showed demand weakened in July, with orders and output indexes falling to their weakest levels since the onset of the Covid-19 pandemic in early 2020.

China's official manufacturing survey indicated activity contracted last month, raising fears that the economy's recovery from widespread lockdowns in spring will be slower and bumpier than expected.

But there were signs that transport and supply chain disruptions caused by the lockdowns were continuing to ease, just in time for shippers preparing for peak year-end shopping demand.

Foreign trade container throughput at eight major Chinese ports rose 14.5 per cent in July, speeding up from the 8.4 per cent gain in June, according to data released by the domestic port association.

Container throughput at Covid-hit Shanghai port hit a record high in July.

Imports still tepid

Import growth was weaker than expected, however, suggesting China's domestic consumption remains soft.

Imports rose 2.3 per cent from a year earlier, compared with June's one per cent gain and missing a forecast of a 3.7 per cent rise.

Analysts have expected import momentum to pick up modestly in the second half of the year, supported by construction-related equipment and commodities as the government ramps up infrastructure spending.

China posted a record $101.26 billion trade surplus last month as a result of the low reading on imports but solid export growth. Analysts had forecast a $90.0 billion trade surplus.

The country's top economic planner said last week that the economy is in the "critical window" of stabilisation and recovery, and the third quarter is "vital."

Top leaders recently signalled they were prepared to miss the government growth target of around 5.5 per cent for 2022, which analysts said had been looking 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 per cent from 4.4 per cent in April, citing Covid lockdowns and the worsening crisis in the country's property sector.