CHINA’S exports grow at a faster pace in July as the Western economic slowdown hasn’t yet led to a softening global demand for Chinese goods.

Also the easing of lockdowns allowed factories, workers and ships to catch up on stalled orders and the export growth offers an encouraging boost to the economy as it struggles to recover from a COVID-induced slump.

Exports rose 18% in July from a year earlier, the fastest pace this year, the General Administration of Customs said yesterday, compared with a 17.9% increase in June and beating analysts’ expectations for a 15% gain.

“The strong export growth continues to help China’s economy in a difficult year as domestic demand remains sluggish,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. Robust growth boosts confidence in the yuan exchange rate, which helps deter capital outflows, he said.

Exports have been an important factor in China’s growth during the pandemic. But rising external uncertainties, including a slowing global economy and high inflation within developed countries, suggest their contribution to the economy this year will weaken.

Many analysts have expected exports to face headwinds as the global economy looks increasingly likely to be heading into a serious slowdown, weighed down by soaring prices and rising interest rates.

A global factory survey released last week showed demand weakened in July, with orders and output indexes falling to their weakest levels since the onset of the COVID-19 pandemic in early 2020.

China’s official manufacturing survey indicated activity contracted last month, raising fears that the economy’s recovery from lockdowns in spring will be slower and bumpier than expected.

But there were signs that transport and supply chain disruptions caused by COVID restrictions were continuing to ease, just in time for shippers preparing for peak year-end shopping demand.

Foreign trade container throughput at eight major Chinese ports rose 14.5% in July, speeding up from the 8.4% gain in June, according to the domestic port association.

Container throughput at COVID-hit Shanghai port hit a record high last month.

July exports may also have been buoyed by pent-up demand from Southeast Asia as supply snarls eased and factories there ramped up production, Bruce Pang, chief economist and head of research at Jones Lang Lasalle Inc., said in a research note.

Moreover, amid negative real interest rate and surging inflation, some European and U.S. customers may have frontloaded orders to ensure they had goods on hand with lower costs, he added.

But imports last month were again weaker than expected, suggesting domestic demand remains soft.

Imports rose 2.3% from a year earlier, compared with June’s 1% gain and missing a forecast for a 3.7% rise.

“Despite an uptick in domestic demand amid loosening COVID curbs, the weak performance of the production side dragged on imports,” said Xu Shuzheng, a researcher at CITIC Securities, adding that COVID flare-ups may hinder the economy’s recovery.

Crude oil imports in July fell 9.5% year on year as fuel demand recovered more slowly than expected.

The volume of imported integrated circuits, a major Chinese import, dropped 19.6% in July from a year earlier, according to calculations. That may be an additional red flag for exports, as a significant amount of the country’s imports are components for goods that are then re-exported. (SD-Agencies)