China Exports See Unexpected Spike In July, Imports Down

China saw another surprise jump in exports last month as the global economy slowly reopened after virus lockdowns, data showed Friday, but there were warnings that while the country is expected to get back on track by year's end overseas shipments would likely struggle.

The readings, however, showed an unexpected fall in imports, highlighting the battle leaders have in stoking domestic demand as a key driver of national growth.

Exports rose 7.2 percent in July, customs data showed, smashing forecasts in a Bloomberg survey for a 0.7 percent drop. The figure was also a massive jump from the 0.5 percent increase in June, which beat expectations as well.

Analysts had warned that a spike in global infections -- forcing new containment measures in some countries -- and weakened external demand could weigh on China's recovery, with the boost from healthcare shipments fading.

Imports fell 1.4 percent, confounding a 0.9 percent rise tipped by analysts.

China's economy contracted 6.8 percent in the first quarter as lockdowns around the country to prevent the coronavirus spreading brought businesses and activity to a near standstill.

But success in containing the disease domestically and the easing of measures helped it rebound rapidly in the following three months.

Analysts told AFP that while there are signs of demand recovery, China's export data could still be "rocky" in the coming months.

ING chief economist for Greater China Iris Pang said the broad uptick of exports -- beyond a medical supplies boost -- suggested that external demand has started to recover.

The weakness in imports, she said, could be down to a drop in crude oil shipments given prices have risen and China had earlier piled up inventory.

Lu Ting, chief China economist of Nomura, expects "decent export growth" to extend for another one to two months, but cautioned some factors behind the trend "might not be sustainable".

"As some countries gradually reopen their economies and start producing personal protective equipment domestically for security reasons, China's exports of those products could decline," said Lu.

Friday's data also showed China's trade surplus with the United States rose 16 percent on-year to $32.456 billion in July.

This year, tensions between the two have soared on a number of fronts, including trade, military, and China's handling of the coronavirus pandemic.

Tommy Xie, head of Greater China Research at OCBC Bank, told AFP exports to the US were strong in July, suggesting growth could also be from "frontloading activity due to concerns about the worsening relationship between the US and China".