International trade rebounds in China

China’s imports and exports recorded better-than-expected growth rates over July, suggesting the economy is stabilising.

Exports rose by 5.1% compared with a year earlier while imports gained a massive 10.9%. Not only does this put an end to two successive quarters of subdued growth, but it also highlights the narrowing trade surplus, which has dropped to US$17.8bn from June’s US$27.1bn. Exports to the US and European Union, China’s biggest markets, increased for the first time in five months.

“Many people were worried that China’s economy would drop very fast in a short period of time,” Zhang Zhiwei, Chief China Economist at Nomura Holdings told Bloomberg. “But now it seems that the real economy hasn’t been seriously impacted. The risk that the real economy will decline rapidly is lower.”

The results follow a meeting of the Politburo where leaders issued reassurances about the state of the country’s economy, claiming that it will continue to expand despite “highly complicated” domestic and international conditions. Export growth declined for the first time in 17 months in June, leading analysts to speculate that the economy may be slowing down. But growth in July has been interpreted as a sign of stabilisation, although the jump in imports is harder to explain.

Wei Yao from Societe Generale in Hong Kong told BBC News: “Even though the government had announced some supportive measures, they should not show effects so soon. The fundamentals in the economy did not support such a strong rebound.”

Economists’ estimates for July exports ranged from a 4% drop to an 8.8% increase. The median import projection was for 1% growth. Trade data is often seen as being unreliable in China, which goes someway to explaining confusion over the surprisingly positive data.

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