Chinese exports surged in June, with imports also rebounding in a surprise boost for the economy as the tariff deadline with the U.S. looms.
According to data released by the country’s customs authorities on Monday, China’s trade surplus grew to $114.8 billion in June, up from $103.2 billion in May and $98.94 a year ago. This surpassed forecasts of $109 billion.
Exports rose by 5.8 percent, accelerating from 4.8 percent in May and also exceeding previous estimates, while imports edged up by 1.1 percent, marking a recovery from the 3.4 percent decline seen the month prior.
Why It Matters
The surprising boost in China’s trading momentum comes amid a period of thawing in the country’s trade dispute with the U.S., and as the two countries rush to secure either a trade deal or progress in negotiations by the deadline of August 12.
Analysts have so far attributed this increase to exporters rushing to get shipments out and capitalize on this pause, and the decline in May orders due to the trade war with the U.S.
What To Know
The exports growth was boosted by shipments to non-U.S. markets. Both exports to and imports from the U.S. dropped, by 16.1 percent and 15.5 percent respectively. However, this was less severe than the 34.5 percent and 18.1 percent drops recorded in May.
China’s trading relationship with the U.S. somewhat stabilized in June, after negotiators secured a tariff truce in early May. The agreement, struck after U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer met with their counterparts in Geneva, saw both countries bring down the significant duties placed on each other’s imports, and established a framework for future negotiations.
This temporary pause is set to expire by August 12, but both countries have continuously accused the other of violating the terms of the truce. Beyond some in-principle agreements on the increased export of rare earths, and promises by the U.S. that it will reduce its trading restrictions on Beijing, discussions since this agreement have yet to produce any major breakthrough.
AFP via Getty Images
Dr. Shang-Jin Wei, professor of Chinese Business and Economy at Columbia Business School, told Newsweek that the “rush to export” ahead of the August 12 deadline “is an important reason for the increase in trade surplus.” He added that sluggish domestic consumption and demand, a long-term issue facing the Chinese economy, had contributed to the relatively weak June imports.
As part of the deal recently struck with Vietnam, Trump said that the country will now face a tariff of 20 percent on its imports, but that a higher rate of 40 percent will apply to goods the U.S. believes have been “transshipped” to the U.S. via China. Experts previously told Newsweek that this loophole could undermine the tariffs placed on China, and the move could add to the difficulties facing China’s exporters.
China’s exports to Vietnam surged by 23.8 percent last month compared to a year earlier, according to CNBC analysis of the customs data, while imports from the country sank 13.7 percent.
What People Are Saying
Dr. Shang-Jin Wei, professor of Chinese Business and Economy at Columbia Business School, told Newsweek: “The US and China have a chance to reach an agreement by August 12, partly because both sides want to have an agreement. The Chinese appear eager to avoid an escalation of trade tensions with the US. The U.S. side, after experiencing the Chinese retaliation through its control of rare earth exports, is also a bit more willing to compromise than before.”
“However, as President Trump has demonstrated a pattern of making new demands on top of settled ones, one can never rule out the possibility of no satisfactory agreement by any particular date,” he added. “For example, just as you think there is an agreement between the U.S. and U.K., or between the U.S. and Vietnam, will you really be surprised if you wake up tomorrow morning and learn that President Trump has just announced new tariffs on these countries?”
Bloomberg economist Eric Zhu said: “The pickup in China’s export growth in June was led by a rebound in shipments to the U.S. after a temporary thaw in the trade war that brought down tariffs. The blip may not last long.”
What Happens Next?
China is set to release second-quarter data on gross domestic product (GDP) on Tuesday, which will give a further indication of how its economy is persevering. Analysts have penciled in a year-on-year growth rate of 5.1 percent, slowed from the 5.4 percent seen in the first quarter.
Last week, Secretary of State Marco Rubio met with China’s foreign minister, a discussion the State Department called “constructive and pragmatic.” Rubio told reporters afterward that the odds of a meeting taking place between Trump and Chinese President Xi Jinping were “high.”
“I don’t have a date for you, but I think it’s coming,” he said. “It’ll happen.”