Chinese export demand has been stronger than most anticipated through the first half of the year, but markets have monitored recent survey data and the prospect of incoming tariffs as factors that could lead to some moderation of exports and manufacturing in China in the second half of the year. Today's data releases appear to support this theme, though a closer look at the data shows some export categories continuing to build on momentum.
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China's export growth slowed to 7.0% year-on-year in July, down from 8.3% YoY which was broadly in line with the expectations of analysts, while import growth saw a larger-than-expected rebound to 7.2% YoY.
Stronger-than-expected imports led to a lower trade surplus
After June's unexpected drop in import growth to negative territory, analysts had expected a return to low single-digit growth in July. The rebound to 7.2% YoY was higher than most market forecasts on the month and marked a three-month high.
Experts have seen declines in real estate-related imports with steel (-10.7%) and lumber (-2.9%) imports remaining in negative territory.
Overall, the details from import product categories indicate that this recovery is not being driven by a recovery of household demand but rather instead reflects the national strategy to drive growth through investing in hi-tech fields and innovation.
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