Chinese exports rise at fastest pace in more than a year

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China’s exports grew at the fastest pace in more than a year last month, with trade remaining a rare bright spot for the world’s second-largest economy despite rising tensions with Europe and the United States.

Exports rose 8.6 percent year-on-year in dollar terms in June, according to data released on Friday by the National Bureau of Statistics, an acceleration from 7.6 percent in May and the strongest expansion since March 2023. The figure beat expectations: a Reuters poll of analysts had forecast growth of 8 percent.

Imports fell by 2.3 percent year-on-year in June, significantly lower than economists’ forecasts of 2.8 percent growth and 1.8 percent expansion in May.

Policymakers in Beijing are increasingly relying on exports and manufacturing to boost growth as the Chinese economy struggles with weak domestic demand and a prolonged slowdown in the real estate sector. A Communist Party economic policy conclave is also being held on Monday.

Trading partners in the US and Europe have responded to the surge in cheap Chinese exports by tightening trade restrictions.

In May, the US announced it would significantly increase tariffs on $18 billion worth of Chinese imports, including 100 percent duties on Chinese electric vehicles. In June, the EU announced additional measures that would increase tariffs on Chinese electric vehicles to nearly 50 percent.

Analysts have suggested that the surge in Chinese exports in recent months may be due to manufacturers bringing forward their products to avoid expected US tariff hikes, which take effect in August.

The disruption of Red Sea shipping routes by attacks by Houthi militants in Yemen has prompted some Chinese exporters to ship their goods earlier so they can be delivered in time for the busy Christmas season.

Continued strong exports alongside relatively weak imports point to a lopsided economic recovery, analysts said. Growth in Chinese consumer prices slowed in June, rising just 0.2 percent year-on-year, while factory prices remained in deflationary territory for the 21st straight month.

In previous years, the Chinese Communist Party’s Central Committee has used the Third Plenary Session to discuss pressing economic issues. Some observers have called for tougher measures to boost domestic demand and restore business and investor confidence.

But China’s premier, Li Qiang, has tempered expectations for drastic measures, telling a meeting of the World Economic Forum last month that the country’s economy should be allowed to “gradually recover.”

The June figures put the country’s trade balance at $99.05 billion, higher than forecasts of $85 billion. In the first six months of the year, exports rose 3.6 percent and imports rose 2 percent compared to the same period in 2023.

Analysts at Capital Economics estimate that exports have increased in both volume and value and that the tariffs, which cover only a small portion of Chinese goods, will have a limited impact in the short term as exporters reroute their shipments.

“Overall, we expect exports to remain a tailwind for economic growth in the near term,” they wrote in a note.