The Star Online (08/08/2019) - HONG KONG: China’s export growth rebounded in July, and imports shrank less than forecast, signaling some recovery in trade just as companies brace for the arrival of new tariffs from the U.S.

Exports increased 3.3% in July from a year earlier, while imports declined 5.6%, leaving a trade surplus of $45.1 billion, the customs administration said Thursday. Economists forecast that exports would drop by 1% while imports would shrink by 9%.

The trade surplus with the U.S. expanded 11.1% in the same period.

Key Insights

President Donald Trump announced last week that the U.S. will impose 10% additional tariffs on the remaining $300 billion worth of Chinese exports starting next month, after the two sides ended their first face-to-face talks in three months without progress. Beijing said it will retaliate.

Stabilising exports would be a brighter sign for China’s slowing economy after a bruising first half, and signs that policy makers are willing to tolerate a weaker yuan also add to the nation’s external competitiveness.

"The headline figures suggest that global demand held up better than expected last month, helping to offset the drag from U.S. tariffs, ” said Julian Evans-Pritchard at Capital Economics in Singapore. "Exports still look set to remain subdued in the coming quarters as any prop from a weaker renminbi should be overshadowed by further U.S. tariffs and broader external weakness.”

China’s yuan slid past a key point of 7 versus the U.S. dollar this week, and weakened to its lowest level against a basket of peers since 2015 on Thursday.

"Though RMB depreciated against the USD and the currency basket lately, global monetary easing has also led to decline in a raft of foreign currencies. As such, it may not necessarily offset the negative impact from the additional tariff

and the global economic slowdown, ” said Carie Li, an economist at OCBC Wing Hang Bank in Hong Kong.

In July, China’s exports to the U.S. in dollar terms shrank by 6.5%, and its trade surplus with the U.S. narrowed to $27.97 billion.

Commodities imports were stronger across the board. Soy was among the standouts, with inbound shipments climbing to the highest in almost a year after China boosted buying of South American supplies and before halting purchases from the

U.S. Imports of coal, crude oil, iron ore and copper concentrates also rose year-on-year. – Bloomberg