China's Exports Top forecasts, but Falling Imports Point to More Stimulus

Cars to be exported sit at a terminal in the port of Yantai, Shandong province, China January 10, 2024. China Daily via REUTERS//File Photo Purchase Licensing Rights
Cars to be exported sit at a terminal in the port of Yantai, Shandong province, China January 10, 2024. China Daily via REUTERS//File Photo Purchase Licensing Rights
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China's Exports Top forecasts, but Falling Imports Point to More Stimulus

Cars to be exported sit at a terminal in the port of Yantai, Shandong province, China January 10, 2024. China Daily via REUTERS//File Photo Purchase Licensing Rights
Cars to be exported sit at a terminal in the port of Yantai, Shandong province, China January 10, 2024. China Daily via REUTERS//File Photo Purchase Licensing Rights

China's exports grew at their fastest in fifteen months in June, suggesting manufacturers are front-loading orders ahead of tariffs expected from a growing number of trade partners, while imports unexpectedly shrank amid weak domestic demand.
The mixed trade data keeps alive calls for further government stimulus as the $18.6 trillion economy struggles to get back on its feet. Analysts warn that the jury is still out on whether strong export sales in recent months can be sustained given major trade partners are becoming more protective.
"This reflects the economic condition in China, with weak domestic demand and strong production capacity relying on exports," said Zhiwei Zhang, chief economist at Pinpoint Asset Management, according to Reuters.
"The sustainability of strong exports is a major risk for China's economy in the second half of the year. The economy in the U.S. is weakening. Trade conflicts are getting worse."
Outbound shipments from the world's second-biggest economy grew 8.6% year-on-year in value in June, customs data showed on Friday, beating a forecast 8.0% increase in a Reuters poll of economists and a 7.6% rise in May.
But imports hit a four-month low, shrinking 2.3% compared with a forecast 2.8% increase and a 1.8% rise the previous month, highlighting the fragility of domestic consumption.
Stronger-than-expected exports have been one of the few bright spots for an economy otherwise struggling for momentum despite official efforts to stimulate domestic demand following the pandemic. A prolonged property slump and worries about jobs and wages are weighing heavily on consumer confidence.

Still, as the number of countries stepping up curbs on Chinese goods increases, so too does the pressure on its exports to prop up progress towards the government's economic growth target for this year of around 5%.
China's trade surplus stood at $99.05 billion in June, the highest in records going back to 1981, compared with a forecast of $85 billion and $82.62 billion in May. The United States has repeatedly highlighted the surplus as evidence of one-sided trade favouring the Chinese economy.
Washington in May hiked tariffs on an array of Chinese imports, including quadrupling duties on Chinese electric vehicles to 100%. Brussels last week confirmed it would impose tariffs on EVs as well, but only up to 37.6%.
Chinese exporters are also on edge heading into U..elections in November in case either major party tips fresh trade restrictions.
Türkiye last month announced it would impose a 40% additional tariff on Chinese-made EVs, and Canada said it was considering curbs.
 



Saudi Non-Oil Exports Hit Two-Year High

The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
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Saudi Non-Oil Exports Hit Two-Year High

The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)
The King Abdulaziz Port in Dammam, eastern Saudi Arabia. (“Mawani” port authority)

Saudi Arabia’s non-oil exports soared to a two-year high in May, reaching SAR 28.89 billion (USD 7.70 billion), marking an 8.2% year-on-year increase compared to May 2023.

On a monthly basis, non-oil exports surged by 26.93% from April.

This growth contributed to Saudi Arabia’s trade surplus, which recorded a year-on-year increase of 12.8%, reaching SAR 34.5 billion (USD 9.1 billion) in May, following 18 months of decline.

The enhancement of the non-oil private sector remains a key focus for Saudi Arabia as it continues its efforts to diversify its economy and reduce reliance on oil revenues.

In 2023, non-oil activities in Saudi Arabia contributed 50% to the country’s real GDP, the highest level ever recorded, according to the Ministry of Economy and Planning’s analysis of data from the General Authority for Statistics.

Saudi Finance Minister Mohammed Al-Jadaan emphasized at the “Future Investment Initiative” in October that the Kingdom is now prioritizing the development of the non-oil sector over GDP figures, in line with its Vision 2030 economic diversification plan.

A report by Moody’s highlighted Saudi Arabia’s extensive efforts to transform its economic structure, reduce dependency on oil, and boost non-oil sectors such as industry, tourism, and real estate.

The Saudi General Authority for Statistics’ monthly report on international trade noted a 5.8% growth in merchandise exports in May compared to the same period last year, driven by a 4.9% increase in oil exports, which totaled SAR 75.9 billion in May 2024.

The change reflects movements in global oil prices, while production levels remained steady at under 9 million barrels per day since the OPEC+ alliance began a voluntary reduction in crude supply to maintain prices. Production is set to gradually increase starting in early October.

On a monthly basis, merchandise exports rose by 3.3% from April to May, supported by a 26.9% increase in non-oil exports. This rise was bolstered by a surge in re-exports, which reached SAR 10.2 billion, the highest level for this category since 2017.

The share of oil exports in total exports declined to 72.4% in May from 73% in the same month last year.

Moreover, the value of re-exported goods increased by 33.9% during the same period.