China exports nudge higher in July as imports dip

Chinese exports rose in July, bucking expectations for a fall, while imports slipped for a third consecutive month as a resolution of the US-China trade dispute remained elusive.

Exports grew 3.3 per cent year on year in dollar terms in July, according to Reuters, bouncing back from a 1.3 per cent fall in the previous month. The reading was above economists’ estimates from a Reuters poll that forecast a 2 per cent fall. 

Imports slipped 5.3 per cent, against a forecast of an 8.3 per cent fall and easing from a 7.3 per cent drop in June.

Those figures resulted in a $45.06bn trade surplus, down from the previous month’s $50.98bn.

Uncertainty over US-China trade relations have rattled markets after Donald Trump escalated trade tensions last week in a tweet that said he would slap 10 per cent tariffs on a further $300bn of Chinese goods. China vowed to retaliate with “necessary countermeasures”.

Larry Kudlow, the top White House economic adviser, said on Tuesday that Washington was “planning for the Chinese [trade negotiating] team to come here [to the US] in September”.

China’s renminbi weakened past the crucial Rmb7 to the dollar mark on Monday, with the US later labelling the country as a currency manipulator and accusing Beijing of weakening its currency to create an unfair trade advantage.

Capital Economics expects exports to remain subdued as a weaker renminbi will be offset by further US tariffs and that a domestic slowdown looks set to weigh on import volumes.

“Though August exports may benefit from some front-loading before the new tariffs go into effect on September 1st, this bump will probably be smaller than it was ahead of earlier rounds of tariffs as US port storage facilities have little spare capacity,” said Julian Evans-Pritchard, senior China economist.

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