China’s Trade Balance Shrinks in July

Investing.com — China’s trade balance shrank more than expected in July, affected by a smaller-than-expected increase in exports amid European tariffs on the electric vehicle (EV) industry, while imports exceeded expectations.

According to customs data released on Wednesday, China’s trade balance showed a surplus of $84.65 billion, weaker than the anticipated surplus of $97.5 billion and down from $99.05 billion in the previous month.

The decrease was primarily due to a lower-than-expected rise in exports following the implementation of higher trade tariffs on the EV sector in early July.

Exports grew 7% year-on-year in July, falling short of expectations for a 9.7% increase and lower than the 8.6% growth seen in the prior month.

While the tariffs impacted exports initially, their overall effect on China’s exports is still expected to be limited. However, the country faces worsening demand in its biggest export markets due to cooling global economic growth.

The smaller trade surplus was also attributed to an unexpected surge in imports, which rose 7.2% year-on-year in July, significantly exceeding the anticipated 3.5% increase and recovering sharply after a 2.3% contraction in the previous month.

This data suggests that domestic demand remains resilient, despite signs of cooling economic growth elsewhere. Nevertheless, it remains uncertain whether the strong imports figure is an anomaly or a trend that will continue.