By Joe Cash and Ethan Wang
BEIJING (Reuters) -China’s exports regained momentum in June as firms rushed out orders to capitalise on a fragile tariff truce between Beijing and Washington ahead of a looming deadline next month, with shipments to Southeast Asian transit hubs particularly strong.
Businesses on both sides of the Pacific are waiting to see whether the world’s two largest economies can agree on a more durable deal or if global supply chains will again be upended by the reimposition of duties exceeding 100%.
Chinese producers, facing weak demand at home and harsher conditions in the United States, where they sell more than $400 billion worth of goods annually, are also hedging their bets and racing to grab market share in economies closer to home.
Customs data on Monday showed outbound shipments from China rose 5.8% year-on-year in June, beating a forecast 5.0% increase in a Reuters poll and May’s 4.8% growth.
“There are some signs that frontloading demand is beginning to wane gradually,” said Chim Lee, senior analyst at the Economist Intelligence Unit. “While frontloading ahead of the August tariff pause deadline is likely to continue, freight rates for China-bound shipments to the U.S. have started to decline.”
“Trade diversion and rerouting appear to be continuing, which will attract the attention of policymakers in the U.S. and other markets,” he added.
Imports rebounded 1.1%, following a 3.4% decline in May. Economists had predicted a 1.3% rise.
The upbeat set of data helped lift market sentiment with the blue-chip CSI300 up 0.2% at the midday trading break, while the Shanghai Composite Index gained 0.4%, nearing its highest level since October.
Analysts and exporters are watching to see whether a deal agreed in June between U.S. and Chinese negotiators will hold, after an earlier agreement reached in May was strained by a series of export controls that disrupted global supply chains for key industries.
Exports to the U.S. grew 32.4% month-on-month, with June the first full month of Chinese goods benefitting from reduced U.S. tariffs, although year-on-year growth remained negative.
Meanwhile, outbound shipments to the 10-member Association of Southeast Asian Nations jumped 16.8%.
China’s June trade surplus came in at $114.7 billion, up from $103.22 billion in May.
China’s rare earths exports rose 32% in June from the month before, the customs data showed, in a sign that agreements struck last month to free up the flow of the metals were possibly bearing fruit.
