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China Trade Balance June 2019

China: Exports contract in June amid escalating trade tensions with the U.S.

In June, exports fell 1.3% over the same month last year, which contrasted the 1.1% increase in May. The print, however, was above the 2.0% decrease that market analysts had expected.

Imports fell 7.3% in annual terms in June, following May’s 8.5% drop. The reading undershot the 4.5% decline that market analysts had forecast.

As a result of the sharp decrease in imports, the trade surplus rose from USD 40.9 billion in June 2018 to USD 51.0 billion in June 2019 (May: USD 41.7 billion surplus). The 12-month moving sum of the trade surplus increased from USD 387 billion in May to USD 397 billion in June.

The external sector is suffering from the trade war with the United States, Ting Lu, Lisheng Wang and Jing Wang, economists at Nomura, comment that:

“We remain cautious on export growth in coming months, because of the effective US tariffs on Chinese products and slowing global economy. Headline import growth may tumble again in July, as the favourable base effect in June is likely to reverse. We expect Beijing to roll out more stimulus measures to stabilise growth and market sentiment, with the scale of such stimulus largely contingent on how US-China trade tensions unfold.”

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