China reports stronger-than-expected June trade growth

China reported stronger-than-expected trade growth in June, with official customs data showing exports rose 27.0 percent from a year earlier. That was above the 19.0 percent forecast in a Bloomberg survey of economists.

Imports rose 36.0 percent, also above the 26.1 percent forecast in the survey and higher than the 27.4 percent increase recorded in May. The source report said the figures came despite global trade disruptions caused by the US-Israeli war on Iran, and provided support for an economy that is increasingly reliant on exports for growth.

Julian Evans-Pritchard of Capital Economics said in a note that trade values had risen sharply, mainly because of higher semiconductor prices linked to the artificial intelligence boom. The value of China's semiconductor exports more than doubled from a year earlier and increased by $2.7 billion from May. Shipments of data processing equipment rose 53.1 percent from a year earlier. Evans-Pritchard said the semiconductor export rise was entirely due to prices caused by an ongoing shortage of memory chips, and said semiconductor export volumes actually fell year on year in June. He also said rising semiconductor prices were helping push up import values, rather than the increase reflecting a surge in domestic consumption.

Automobile exports rose 69.6 percent year on year, which Evans-Pritchard said reflected strong demand for Chinese electric vehicles. Shipments to the United States rose 13.9 percent to $43.5 billion, leaving China with a $28.9 billion trade surplus with the United States. The source report said ties between Washington and Beijing have stabilised since US President Donald Trump visited Beijing in May, but that the trade imbalance remains a source of friction.

China also recorded a $32.9 billion trade surplus with the European Union in June, up from $30.7 billion in May. Zhang Zhiwei of Pinpoint Asset Management said the data showed the competitiveness and resilience of China's manufacturing sector, and said it also added pressure to trade tensions between China and its trading partners, especially Europe.

The volume of China's rare earth exports fell 34 percent last month and was down 6.4 percent year on year in the first six months of the year, as Beijing tightened restrictions on the critical elements. The source report said China accounts for around two-thirds of global rare earth production, and that the minerals are used in products ranging from smartphones to missiles. China's overall trade surplus reached $126 billion in June, up from $105 billion in May.