China’s Trade Surplus Rises in July on Exports of Stay-at-Home Technology and Lower Commodity Prices
Chinese exports unexpectedly rose in July, thanks to booms in demand for high-tech gear needed for workers staying at home, according to an analysis by Trade Data Monitor, the world’s premier source of export and import statistics.
As the world’s number one manufacturer and exporter of consumer and industrial goods, China is considered a bellwether for the global trading economy. How it does is a key measure of how long the world will take to rebound from the Covid-19 pandemic.
In July Chinese exports rose 7.2% year-on-year to $237.6 billion and imports declined 1.4% year-on-year to $175.3 billion, according to Geneva- and Charleston-based TDM. That boosted China’s trade surplus with the rest of the world, lifting it to $62.33 billion from $46.42 billion surplus in June. Economists had expected exports to fall and imports to increase. The flip was partly caused by a decline in commodity prices and an unexpected boom in demand for high-tech goods including mobile phones.
After half a year of the pandemic, some trends are emerging. The European Union and U.S., whose citizens were helped by generous stimulus packages, are doing better than the rest of the world. Chinese exports to the U.S., Europe, and ASEAN countries were all collectively higher in July 2020 than the same month a year ago. Exports to the U.S., for example, increased 12% to $43.7 billion, while imports increased 3% to $11.3 billion, widening the U.S.-China trade deficit. However, shipments to India, Africa and Latin America declined, suggesting that the global economic contraction is already hurting the world’s emerging economies.
China’s mighty strategic advantage during the pandemic is that its factories make everything people need to survive, communicate and work during a time of stay-at-home orders and remote work lives.
Another trend revealed by Chinese trade data is a bifurcation of the global economy into stationary and mobile goods. Anything that involves physically moving around is slumping, and anything that helps people when they’re grounded is thriving.
For example, Chinese exports of bags and containers used to travel fell 23% to $1.9 billion. Footwear: Down 23% to $3.6 billion. Shipments of auto parts fell 15% to $4.6 billion.
But exports of high-tech goods increased 16% to $69.4 billion. Mobile phones jumped 43% to $11.1 billion. Furniture exports rose 23% to $5.5 billion. Home appliance shipments rose 37% to $6.6 billion. Even exports of toys rose 22% to $3.5 billion.
And exports of medical devices soared 78% to $2 billion in July.
The big question for the world in 2020 is how fast regular industrial activity might resume. The picture here is murkier. China increased imports of petroleum 25% by volume, but its exports of steel products declined 25% to $3.6 billion.
China’s imports fell in dollars, which was partly a reflection of falling commodity prices around the world. As a manufacturer of finished goods, China tends to import raw materials and export consumer products.
Although China continued to ramp up purchases of some food commodities, like cereals (+27%) and soybeans (+16%), the pictures was more mixed for key industrial commodities. Imports of iron ore increased 24% to 112.6 million tons, while copper declined 13% to 1.8 million tons. Imports of primary plastics increased 22% to 3.8 million tons.