Record China trade figures surprise but economists caution over weakening outlook – business live

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China has reported a record trade surplus thanks to strong export growth, but economists suggest the recovery from coronavirus pandemic lockdowns could be short-lived.

Exports held up well last month, thanks to a backlog of orders still being cleared. But it won’t be long before shipments drop back on cooling foreign demand. Meanwhile, imports continued to trend down, pointing to further domestic weakness.

Although the main constraints on exports recently have been on the supply-side, we think that cooling global demand will soon deflate China’s pandemic export boom.

We think the data suggest export growth should wane in the second half of the year, with sources of demand fading, but policy efforts to shore up manufacturing have the effect of subsidising exports, so the process is taking longer than we initially expected. Imports, meanwhile, are unlikely to impress, but should eke out continued single digit growth. The combination should exert gradual downward pressure on the trade balance in the second half.

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