China’s exports forecast to surge on pre-tariff rush

China’s exports likely rose to a 15-month high in June, driven by manufacturers rushing shipments out ahead of potential new tariffs from key trading partners.

Export growth forecast is expected to rise by 8.0 per cent year-on-year, showing improvement from 7.6 per cent in May and the strongest performance since a 10.9 per cent March 2023.

Import growth is expected to increase by 2.8 per cent year-on-year, outpacing the 1.8 per cent growth in May, driven by increased manufacturing activity for exports. The trade surplus is forecasted to rise to $85.0 billion from $82.62 billion in May.

Despite a slow domestic economy due to a property slump and weak consumer confidence, exports have been a positive aspect. China’s strong manufacturing base, especially in steel, solar, and consumer goods, is considered resilient to new trade restrictions.

Many countries are imposing restrictions on Chinese imports, challenging China’s goal of achieving five per cent economic growth by 2024. The US raised tariffs on electric vehicles to 100 per cent, and the EU imposed tariffs up to 37.6 per cent.

The electronics sector is experiencing a global upswing, providing some relief. China’s investments in expanding legacy chip production may benefit from rising demand.

South Korean exports to China surged by 16.8 per cent last month, indicating increased tech imports.

However, the European Commission has reportedly seeking feedback from the semiconductor industry regarding China’s chip production expansion, which could potentially limit China’s strong performance in electronics exports.

Attribution: Reuters