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July 12, 2024 – China posted a record trade surplus of $99 billion last month, amid signs that importers were bringing forward orders to avoid higher tariffs on goods from the world’s second-largest economy.
The latest official data from Beijing showed that exports grew at the fastest pace in 15 months, while China’s weak domestic economy led to a decline in imports.
China’s trade surplus was much larger than the $85 billion that financial markets had expected and came at a time when developed countries were highly concerned about Chinese exports.
Higher U.S. tariffs on Chinese-made electric vehicles and other high-tech products will take effect on August 1, while higher EU import duties on Chinese electric vehicles took effect earlier this month.
Analysts say the gap between booming exports and sluggish imports highlights China’s economic dependence on wealthy Western consumers and will force Beijing to do more to stimulate domestic demand.
“This reflects China’s economic situation, with weak domestic demand and production capacity relying on exports,” said Zhang Zhiwei, chief economist at Pindian Asset Management.
“The sustainability of strong exports is the main risk facing the Chinese economy in the second half of the year. The U.S. economy is weakening. “The trade conflict is intensifying.”
Exports rose 8.6% year-on-year in June to $308bn (£238bn), bringing China’s total exports to $1.7tn in the first half of 2024, up 3.6% year-on-year.
In the first half of 2024, automobile export value increased by 18.9% and quantity increased by 25.3% despite a decrease in export prices.
Lynn Song, chief China economist at ING Bank, said there could be a front-end effect before EU and U.S. auto tariffs take effect, “but the tariffs could lead to a slowdown in auto exports by the end of the decade.”
Sales of home electronics grew 14.8% by value, but volume grew even faster at 24.9%.
Semiconductor exports increased by 21.6% year-on-year in value and 9.5% in volume. “The strong growth in semiconductor exports suggests that China’s efforts to achieve technological self-sufficiency and transform to high-tech manufacturing are beginning to pay some dividends,” Song said.
Kelvin Lam, China economist at Pantheon Macro, said China’s exports to the United States, Britain and Germany rebounded last month. “Exports of high-tech products, electromechanical products, automobiles and ships grew faster than the lower value-added products that fueled China’s boom in the 1990s.”
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