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China Trade Balance July 2020

China: Export growth accelerates on July due to strong global demand for medical supplies

In July, exports expanded 7.2% over the same month in the previous year, following June’s 0.5% rise. Moreover, the print contrasted the 0.7% drop that market analysts had expected.

Meanwhile, imports fell 1.4% in annual terms in July. The print contrasted both the 2.7% rise in June and the 0.8% increase that market analysts had projected.

As a result of the stronger expansion in exports, the trade surplus jumped from USD 44.0 billion in July 2019 to USD 62.3 billion in July 2020 (June 2020: USD 46.4 billion surplus). The 12-month moving sum of the trade surplus rose from USD 412 billion in June to USD 431 billion in July.

July’s strong reading in exports reflected buoying demand for medical supplies across the globe. That said, Ting Lu, Jing Wang and Lisheng Wang, economists at Nomura, add three other factors:

“China is the first major industrial economy with COVID-19-related disruptions largely behind it. […] Third, China further strengthened its role as the world’s factory since March, when manufacturing in other major industrial economies was severely hit by the pandemic. Fourth, unprecedented fiscal stimulus and money printing in other major economies (especially the US) bolstered their residents’ purchasing power even as their countries were in lockdowns.”

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