China’s Trade Surplus Hits Record But Slowdown Risks Remain

China’s surprisingly strong export growth in July lifted its trade surplus to another record and provided some much-needed economic support, but the country will still have to find ways to keep its fragile recovery on track as the global economy slows this year, Bloomberg News reported. The nation’s trade balance climbed to about $101 billion last month, while exports in dollar terms grew 18% from a year earlier -- far higher than economists’ estimates of a 14.1% gain. “The health of China’s economy in the second half of 2022 largely depends on whether domestic demand could take up the baton from the slowing external demand,” wrote Larry Hu, head of China economics at Macquarie Group Ltd., in a note. Hu expected China’s trade surplus, which last month reached the highest in data compiled since 1987, could narrow in the coming months as the global economy continues to slow and as the Chinese economy recovers from a trough in the second quarter. The strength in exports was mainly supported by automobiles, steel products and textile-related products, according to an analysis by Goldman Sachs Group Inc. Export growth of automobiles accelerated to 64% year-on-year in July from 21.2% in the previous month, while the rise in shipments of steel products remained solid at 41.2%, the firm’s economists including Chen Xinquan wrote in a note. Read more.
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