China’s export growth slowed in June and imports shrank more than expected, as the continuing trade war with the U.S. and a global slowdown hurt trade.

Exports declined 1.3 per cent in June from a year earlier, while imports decreased 7.3 per cent, leaving the trade surplus of US$50.98 billion, the customs administration said Friday.

Imports from the U.S. slumped 31.4 per cent from a year earlier; exports to the U.S. fell 7.8 per cent.

Key Insights

  • The US$29.9 billion surplus in trade with the U.S. was the biggest this year
  • With global growth slowing and U.S. tariffs on Chinese goods hurting demand from China’s biggest export market, Chinese shipments have been weak for the past few months. That undercuts imports, which have also been hit by the slowing domestic economy
  • Top negotiators from the U.S. and China talked by phone this week for the first time since Presidents Donald Trump and Xi Jinping agreed late last month to another truce in the trade war
  • China will continue lowering import tariffs and improving export rebate policies to stabilize trade, according to a readout of the State Council meeting chaired by Premier Li Keqiang this week

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“The data confirm our view that the high tariffs have a negative impact on the domestic economy,” said Tao Wang, chief China economist at UBA AG in Hong Kong. “We expect exports to continue to be weak for the rest of the year, but probably not as bad as in June,” due to the expectation that “China’s infrastructure investment will grow faster in the second half as more of the policy support comes through.”

--With assistance from Tomoko Sato