China’s export industries performed strongly last month after spending the first half of the year hampered by shortages of raw materials and pandemic-related lockdowns 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, though imports remained sluggish.
Analysts had expected exports to fade amid growing signs that Europe, the US, UK and Australia are heading for recession, dampening the outlook for global consumption.
Foreign trade container shipping docking at eight major Chinese ports rose 14.5% in July, speeding up from the 8.4% gain in June, according to data released by the domestic port association.
Container throughput at Shanghai port, one of the worst-hit by Covid-related lockdowns, reached a record high in July.
The export data is likely to cheer Chinese leaders who have come under pressure following a general economic slowdown many have blamed on a weakening property market.
A boom in property development in recent years has resulted in a mountain of debt triggering a wave of bankruptcies across the construction and related industries.
S&P Global rating agency said last month property sales in China could fall by one-third this year, as people lose faith in the market and pressure increases on struggling developers to complete pre-sold apartments.
China’s central bank has sought to ease borrowing rules to make sky-high property values more affordable and prevent further corporate insolvencies. Local governments have also expanded new infrastructure projects to boost domestic business activity.
However, many analysts remain sceptical Beijing can orchestrate a soft landing for the property sector that cushions the economy from the worst effects of a slide in prices, 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 indexes falling to their weakest levels since the onset of the pandemic in early 2020.
Indicating an imminent and broad slowdown in activity, China’s official manufacturing survey showed activity contracted last month.
The surge in exports pushed China’s trade surplus to a record $101.3bn (£839m) last month.
However, while exports played a part in boosting the figures, weaker imports were also a large factor.
Imports rose 2.3% from a year earlier, compared with June’s even more modest 1% gain.
Analysts have expected import momentum to pick up in the second half of the year, supported by construction-related equipment and commodities in the wake of increased infrastructure spending.
According to a meeting last week of the country’s top economic planners, the economy is in the “critical window” of stabilisation and recovery, and the third quarter is “vital”.
In the first half of this year, retail sales dropped 0.7% from a year earlier as many consumers were confined at home amid strict antivirus measures.
The National Development and Reform Commission, said: “[We should] seize the time window of the peak season for construction in the third quarter, improve work efficiency [and] help create jobs for local people nearby as much as possible.”
Beijing recently signalled it was prepared to miss the government growth target of about 5.5% 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% from 4.4% in April, citing Covid lockdowns and the worsening crisis in the country’s property sector.