China has reported a record trade surplus of $99 billion (£76.4 billion) for last month, driven by a surge in exports as foreign importers rushed to beat impending tariffs on goods from the country. The latest official data from Beijing reveals that exports grew at their fastest rate in 15 months, while imports experienced a decline due to weaknesses in China’s domestic economy.
The size of China’s trade surplus exceeded market expectations of $85 billion, signaling heightened concern among developed nations about Chinese exports. This increase comes ahead of higher US tariffs on Chinese-made electric vehicles and other high-tech products, set to take effect on August 1st, along with recent EU import duty hikes on Chinese electric vehicles.
Analysts point out the disparity between booming exports and sluggish imports underscores China’s reliance on affluent Western consumers and underscores pressure on Beijing to stimulate domestic demand.
Zhiwei Zhang, Chief Economist at Pinpoint Asset Management, commented, “This reflects China’s economic conditions, with weak domestic demand and strong production capacity relying on exports. The sustainability of strong exports poses a major risk for China’s economy in the second half of the year, especially amid weakening economic conditions in the US and escalating trade conflicts.”
In June, exports rose by 8.6% year-on-year to $308 billion (£238 billion), bringing China’s total exports for the first half of 2024 to $1.7 trillion, a 3.6% increase year-on-year. Key sectors such as auto exports saw substantial growth, with a rise of 18.9% in value and 25.3% in volume amid lower export prices.
Lynn Song, Chief China Economist at ING Bank, noted, “There was likely a front-loading effect before auto tariffs from the EU and US took effect, but tariffs could lead to a slowdown in auto exports towards the end of the year.” Meanwhile, household electronics sales increased by 14.8% in value and showed faster volume growth of 24.9%.
Semiconductor exports also saw robust growth, rising by 21.6% in value and 9.5% in volume year-on-year. Kelvin Lam, China Economist at Pantheon Macro, highlighted a pickup in Chinese exports to key markets such as the US, UK, and Germany, driven by growth in high-tech products, mechanical and electrical items, cars, and ships.
The data underscores China’s ongoing pivot towards high-tech manufacturing and efforts to enhance self-sufficiency in technology, yielding positive results in semiconductor exports.
