Double Digit Surge in Chinese Imports & Exports

Double Digit Surge in Chinese Imports & Exports

For those with an interest in international import and export trends, June 2017 was an interesting month. Chinese exports, ever popular, saw an acceleration in growth – for their fourth consecutive month - with key drivers being machinery, electronics, and high-tech products.

Many have chosen to view this as a vital barometer by which the health of global trade can be measured, which makes these statistics even more noteworthy.

An impressive rate of growth

The most recently released trade data shows some fascinating figures in terms of the speed of growth being witnessed, with an increase in exports of 11.3 percent year on year.

Imports were even stronger, with an annual growth of 17.2 percent. This increase was primarily driven by demand for crude oil and also, more significantly for freight markets, capital goods.

Looking at growth per month, we see some more interesting numbers cropping up, with ordinary exports having increased by 6.2 percent in June compared with 3.4 percent in May. Processing exports showed a greater rise still, going from a growth of 6.7 percent two months ago, to 10.8 percent last month.

Such increased demand has primarily stemmed from the ‘G3’ markets (the US, the EU, and Japan), where they rose 15.8 percent year on year, compared with 9.7 percent in May. Exports to non-G3 countries, on the other hand, were hardly noteworthy, with a sluggish increase of 4.7 percent annually compared with 2.8 percent for the month prior.

As expert Kelvin Lam explains: “Looking at the breakdown, June’s exports were driven by sharp improvements in the electronics and machinery (10.2 percent year on year) and high-tech products (10.9 percent year on year), while exports of labour intensive goods such as toys, garments, and furniture, which accounts for around one-fifth of China’s exports, also picked up modestly to 6.2 percent year on year.”

He adds: “Taking a closer look, exports of automatic data processing machines such as computers rose 29.2 percent year on year, while mobiles phones grew by a meagre 1 percent year on year. Notably, export growth of semiconductors turned positive in June, at 0.2 percent year on year.

“We think the industrial upgrading in China and stronger global demand will support export growth in the coming quarter.”

Overall Asian outlook positive

This is a trend seen across Asia, where experts suggest that recent purchasing managers’ indexes for the continent indicate strong peak seasons for both air and ocean, with only a small downside risk remaining.

This indicates that after a short period of ‘fizzle’, exports are soon likely to ‘sizzle’ again, with new export orders expanding in June in every region except Korea. Some hypothesise that this may in part be due to the ramping up of iPhone production.

All in all, such patterns bode well for a strong summer season, even if professionals such as Frederic Neumann feel the need to warn that this trend is likely to be short-lived. As he explains: “This could yet turn out to be a narrow, and fairly short-lived, bounce. Job growth in manufacturing, for one, is still relatively weak in emerging Asia, including China, and that’ll keep a damper on consumption.”