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China’s trade is increasing as the economy recovers from the virus slump



China’s trade improved in June with a new sign that the world’s second largest economy is recovering from the coronavirus pandemic. However, exporters face threats, including tensions with Washington and a potential drop in demand in the US and Europe.

Chinese imports rose 3 percent year over year to $ 167.2 billion and recovered from a decline of 3.3 percent in May, Tuesday’s customs data showed. Exports rose 0.4 percent to $ 21

3.6 billion, an improvement from the 16.7 percent decline the previous month.

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US goods imports rose 10.6 percent to $ 10.4 billion despite tariff increases in the battle with Washington for trade and technology. Exports to the United States increased 1 percent to $ 39.8 billion.

China, where the pandemic started in December, was the first economy to start the fight to revive normal business in March after declaring the virus under control. Manufacturing is recovering, but consumer spending is weak. Forecasters say exports are likely to decrease as demand for masks and other medical supplies declines and US and European retailers cancel orders.

Leading indicators “indicate that exports will shrink again soon,” said Martin Rasmussen of Capital Economics in a report.

Relations with the United States, China’s largest national export market, have deteriorated to their lowest level in decades.

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Disputes over Hong Kong, human rights, and the South China Sea exacerbated the burden that began with a customs war launched by the Trump administration in 2018 over Beijing’s technological ambitions and trade surpluses.

The two sides have announced sanctions against some prominent Chinese and US politicians in an abuse dispute in the northwest region of Xinjiang, although it is unclear whether these officials will be affected.

President Donald Trump said Friday that work on the second phase of an agreement to end the customs war was a low priority, given that Beijing’s dealing with the pandemic had “severely damaged” relations.

The two sides signed a “phase 1” agreement in January to postpone further penalties, but the tariff increases already imposed remained.

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China’s June imports were boosted by a 74 percent increase in US soybean purchases under a Beijing pledge in the January agreement to reduce the trade surplus with the United States by importing more food and other goods.

“China’s imports from the United States are likely to remain elevated in the second half of this year,” Nomura economists said in a report.

Imports of semiconductors manufactured in the USA accelerated to 18.6 percent year on year, which Citigroup economists believe may have been motivated by concerns that US export sanctions against Chinese technology giant Huawei Technologies Ltd. be fully enforced after a temporary postponement.

Imports should “continue to grow” as the government spends more on economic recovery and consumer demand, Rasmussen said.

China’s global trade surplus declined from $ 62.9 billion in May to $ 46.4 billion.

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The Chinese economy contracted 6.8 percent in the first quarter, the worst performance since at least the mid-1960s. The ruling party skipped announcing an annual economic growth target, but private sector forecasts range from low single-digit numbers to a small decline.

Some forecasters raised their outlook slightly after factory activity improved more than expected in May.


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