By Gina Lee
Investing.com – Chinese exports recorded a much better-than-expected growth in June, with imports and the trade balance also beating expectations. However, signs are beginning to emerge of a slowdown in China’s economic recovery from COVID-19.
Customs Administration data released earlier in the day said exports grew 32.2% year-on-year in June, higher than the 23.1% growth in forecasts prepared by Investing.com and the 27.9% growth recorded in May. Imports grew 36.7% year-on year, higher than the forecast 30% growth but below May’s 51.1% growth.
The trade balance stood at $51.53 billion, the highest since January 2021. The surplus was above both the $44.2 billion in Investing.com forecasts and May’s $45.54 billion figure.
The continuous global appetite for Chinese goods such as medical goods and work-from-home equipment helped drive the surprising growth alongside rising prices. But high shipping costs and increasing production capacity outside the country have contributed to supply shortages, a possible sign of the slowdown in the COVID-19 recovery.
“The surprise surge in exports is probably in large part due to rising commodity prices, as commodities like iron ore soared and price pressures passed on from imports to exports,” Commerzbank (DE:CBKG) AG (OTC:CRZBY) senior emerging markets economist Zhou Hao told Bloomberg. However, export growth will likely slow in the second half of 2021 because of a high base in 2020, he added.
Customs administration spokesman Li Kuiwen also warned that growth in imports and exports would slow down for the rest of 2021, while noting that “China’s foreign trade in the second half still has hopes of achieving relatively fast growth.”
An outbreak of COVID-19 cases in June 2021 at one of China's major export hubs in southern Guangdong province caused delays in shipments at some major ports for much of the month. Although the outbreak was contained, exporters must now deal with rising raw material and freight costs as well as logistics bottlenecks.
China’s trade surplus with the U.S. continued to increase, reaching $32.6 billion in June. The two countries started exchanges of top officials in June 2021 to address mutual concerns, with the U.S. conducting a review of trade policy, ahead of the expiry of their Phase One trade deal at the end of the year.