China Trade in June Beats Expectations

China has posted trade figures for June on Thursday that were stronger than had been expected, bolstered by strong global demand for goods made in China and continued demand for construction materials within China. However, local curbs on bank lending might lead to pressuring imports later in 2017.

Exports from the second largest economy in the world increased by 11.3% from the same period one year previously, while China’s imports grew by 17.1% both exceeding expectations of analysts showed official data.

While the exports benefitted from strong demand for industrial goods and electronics, an increasing trade surplus, in particular with the U.S. might add to tensions in trade as President Donald Trump of the U.S. seeks to increase activity in the manufacturing sector in the United States.

A trade increase between North Korea and China during the first six months of 2017 could add to pressure between Washington and Beijing.

Analysts said that political and economic risks could help undermine much of the trade momentum China has seen during the first six months of 2017.

One industry analyst said that looking forward, export growth in China is expected to slow due to uncertainties in demand because of the rising risks geopolitically and the stronger yuan and U.S. dollar rate of exchange during the first six months of the year.

A trade surplus was posted by China of more than $42.76 billion during June, slightly higher than forecasts by analyst for a $42.43 billion surplus and wider than the previous month of $40.80 billion.

Analysts were expecting shipments for June from the largest exporter in the world to rise by 8.7% which would be in line with growth from May. Imports had been forecasted to jump 13.1% easing off the strong but unexpected May jump of 14.8%.

The demand in the country for imports, in particular industrial commodities like coal and iron ore to feed its construction boom, remained strong the past few months.

That is thanks in a large part to the resilient demand for real estate in smaller cities across China with lax rules for properties as authorities attempt to clear up the housing glut.

Analysts however say that a slowdown in the demand for materials abroad might already be affecting results.

Exports from China denominated in the yuan increased by 15% during the first six months of this year compared to the same time one year ago, while imports were up 25.7% during that same period.

Several economists expect the Chinese government to intensify its crackdown on the unscrupulous lending practices and a cool down in real estate to equal slower growth.