The trade conflict with the United States has intensified, and China’s exports in July have unexpectedly increased by 3.3%. However, exports to the United States fell by 6.5%. Exports to Europe, South Korea, Japan, and Southeast Asia increased.
According to Reuters, the export volume of Chinese companies in July unexpectedly did not decrease. Customs data released on Thursday (August 8) showed that China’s exports grew by 3.3% year-on-year in July despite trade conflicts with the United States. Experts had expected a 2% decline. Exports in June fell by 1.3%.
Imports are also better than experts’ expectations: the decline is 5.6%, which is expected to fall by 7.3%.
As a result, China’s trade surplus in July was $45.1 billion. Although slightly lower than June (nearly 51 billion US dollars), it is still higher than expected (40 billion US dollars).
However, experts predict that there will be no steady upward trend. Exports may continue to be weak in the next quarter. “The support of the devaluation of the renminbi may be weakened by the imposition of further tariffs by the United States and the general weakness of demand.”
This week, the exchange rate of RMB against the US dollar fell to its lowest level in more than a decade. This makes China’s exports more competitive, partially offsetting the losses caused by US tariffs. The United States subsequently designated China as a currency manipulator.
Export to the United States shrinks
China’s exports to the United States shrank by 6.5% in July. Exports to Europe, South Korea, Japan and especially Southeast Asia.
ANZ analyst Betty Wang believes this may mean that some exporters are trying to diversify their target markets. “This may alleviate the downside crisis in bilateral trade with the United States to some extent.”
China’s trade surplus with the United States was close to $28 billion in July. Although slightly lower than the $29.9 billion in June, it still reached $168.5 billion in the first seven months of this year. The trade surplus is also a point of dissatisfaction expressed by President Trump.
Significant increase in rare earth exports in July
China’s rare earth exports increased by 32.2% in July to 5,243 tons. This is the second consecutive month of growth and the highest value since the end of 2018. However, rare earth exports in the first seven months of this year fell by 7.3% to 28,476 tons. About 80% of the US’s demand for rare earths is imported from China.