China’s July exports increased by 7.2%, exceeding expectations. This increase was driven by shipments, particularly to Southeast Asia, in connection with a weak tariff truce with the US. Global traders and investors are anxiously awaiting the resolution of the trade dispute between the US and China by August 12, and whether global supply chains will be disrupted again. US President Trump imposed a 40% transit tariff on China, a 100% tariff on chips and pharmaceuticals, and an additional 25% tariff on countries importing oil from Russia. China’s strong export growth is noteworthy, particularly with shipments to Southeast Asia. China’s exports to the US decreased by 21.67%, but shipments to ASEAN increased by 16.59%. The trade truce between China and the US expires on August 12, and Trump has signaled that he may impose new tariffs on China’s purchase of Russian hydrocarbons. Xu Tianchen, an economist from the Economist Intelligence Unit, stated that “Southeast Asia is playing an increasingly important role in U.S.-China trade.”
China’s trade surplus fell to $98.24 billion in July, below the $114.77 billion level in June.
During the same period, the US trade deficit with China fell to its lowest level in 21 years.China’s imports reached record levels in some products, such as soybeans, while showing a weak performance in other areas such as the construction sector and domestic demand. “The increase in imports may be misleading due to stockpiling in some products,” said Zichun Huang, a Chinese economist at Capital Economics.
The slowdown in China’s real estate sector is negatively impacting domestic demand and the construction sector. Chinese officials aim to prioritize boosting domestic demand in their five-year policy plan. However, export growth is expected to slow sharply in the second half of the year due to Western trade pressures. High tariffs and new measures to redirect China’s shipments will continue to hinder growth.
