China’s exports rose 23.9% year-on-year in July, edging down from 27.0% YoY, and coming in broadly in line with expectations (market: 23.0%, ING: 28.1%). In the first seven months of the year, exports rose 18.5% YoY to $2.52tn.
The product breakdown of China’s exports continued to show the shift toward higher value-added exports. In July, semiconductor exports saw another month of triple-digit growth at 116.6% YoY, ship exports surged to 92.4%, auto exports slowed slightly to 60.4%, and hi-tech exports were stable at 52.7%.
By export destination, we saw the fourth straight month of double-digit YoY export growth to the US, which rose 17.0% in July to bring the full-year export growth to 2.6% YoY. We’ve seen some further scuffles between China and the US over the past month, particularly in tech-related categories. The US banned imports of certain robotics products and power inverters from China. It added 43 Chinese companies to the Uyghur Forced Labor Prevention Act, leading to retaliation from China in the form of export controls on drones to the US. China also added 6 US entities to countermeasure lists. For now, the fragile trade truce remains in place ahead of President Xi’s visit to the US on 24 September. This meeting could go a long way to deciding whether this recovery will persist into the fourth quarter.
China’s fastest-export-growth destinations in July included Mexico (48.8%), Korea (46.6%), ASEAN (38.4%), and Russia (34.9%), while exports to the EU (16.0%) and Japan (14.0%), though solid, grew at a more moderate pace.