July trade data released on Thursday showed stronger-than-expected global demand for China’s exports, good news for the key manufacturing sector. As important, a greater-than-expected increase in imports suggested strengthening demand in China’s domestic economy.
The data followed a survey of manufacturing companies released last week that showed modest expansion in Chinese factory activity in July.
Taken together, the latest numbers indicate that China’s growth may have bottomed out in the second quarter, raising expectations of steady growth in the remaining months of the year. That could help China’s economy hit Beijing’s 7.5% growth target for the year, following economists’ concerns that it could post an embarrassing miss.
Economists say it is too soon to conclude that the worst is over for China. Other measures of manufacturing that place greater emphasis on small- and medium-size businesses continued to show conditions deteriorating in July.
Exports beat expectations, rising 5.1% year-over-year in July after a 3.1% fall in June. Imports were also strong, up 10.9% year-over-year compared with a fall of 0.7% the previous month.
Unlike previous figures this year, China’s export data didn’t appear to be inflated by companies doctoring invoices to evade controls on funds entering the country. Exports to Hong Kong—the first destination for many mainland Chinese goods and the main channel for exaggerated sales—were up just 2.3% year-over-year. Chinese authorities cracked down on overinvoicing earlier this year.
Stronger demand from the U.S. and Europe was a key factor behind the improvement in exports. Shipments to the U.S. rose 5.3% year-over-year, while sales to the European Union managed a 2.8% increase—a turnaround after several months of contraction.
That reflected a moderate improvement in the economies of China’s two largest trade partners. In the U.S., growth ticked up to 1.7% in the second quarter from 1.1% in the first, measured at annualized rates.
Analysts estimate that the euro zone climbed out of recession in the second quarter, though only barely: RBC Capital Markets predicts a growth rate of just 0.1% over the previous quarter.
The positive scenario –
China is at 7-7.5% GDP growth for 2013, 2014 and 2015
USA is at 2.5-3.0% GDP growth in 2014, 2015
Europe core 2.0% GDP growth in 2014
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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