China exports grow faster than expected in July

China's exports grew faster than expected in July, which bucked expectations that waning global demand would weigh on trade and provide support for an economy struggling with sporadic Covid outbreaks and a property downturn.

Exports in US dollar grew 18% last month from $332.96 billion a year ago, the General Administration of Customs said yesterday. That beat the median estimate of 14.1% gain in a Bloomberg survey of economists, and is compared to an increase of 17.9% in June.

Imports grew by 2.3%, compared to an increase of 1% in June. The trade surplus of $101.26 billion was lower than the median estimate of 4% growth, and the trade surplus was lower last month, according to the data.

China's export growth surprised on the upside. The strong export growth continues to help the Chinese economy in a difficult year, as domestic demand remains sluggish, said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. The surprisingly strong export growth helps to boost confidence in the RMB exchange rate, which in turn helps deter capital outflows. There are rising external uncertainties that suggest their contribution to the economy this year will weaken, including a slowing global economy and high inflation within developed countries. That complicates the picture for a country that is already under tremendous strain.

China's economy rebounded in July from Covid outbreaks and restrictions as bottlenecks on production and logistics eased further. The recovery remained fragile, weighed down by property sector woes, still-weak domestic demand and fresh virus flareups.

At a Politburo meeting last month, authorities said the country should strive for the best outcome possible for economic growth in 2022, and released a statement that didn't explicitly refer to the growth target of around 5.5%, which economists think is out of reach. The same week as that meeting, China s top leaders told government officials that the goal should serve as guidance rather than as a hard target that must be hit, according to people familiar with the matter.

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