China's export growth continues, better H2 outlook

China's exports rose for a third straight month in June as the country's foreign trade continued its warming trend, relieving some pressure on the central government to keep the economic engine running stably and quickly.

The exports increased 7.2 percent year on year to 186.8 billion U.S. dollars in June, with the growth pace slowing mildly from the previous month, showed data released on Thursday by the General Administration of Customs (GAC).

In the same period, imports rebounded to 155.2 billion U.S. dollars, up 5.5 percent from a year ago, after the volume tumbled surprisingly in May. Total foreign trade increased 6.4 percent to 342 billion U.S. dollars, the data showed.

Trade balance realized a surplus of 31.6 billion U.S. dollars in June, following 35.9 billion U.S. dollars in May and 18.45 billion U.S. dollars in April, according to the GAC.

A strong second quarter drove up figures for the first half.

The combined foreign trade volume in the Jan.-June period saw year-on-year growth of 1.2 percent to 2.02 trillion U.S. dollars. Exports increased 0.9 percent and imports went up 1.5 percent during the period, while the trade surplus stood at 102.86 billion U.S. dollars.

GAC spokesman Zheng Yuesheng attributed the improving export and import figures to rising demand due to global economic recovery and pro-trade measures from the Chinese central government, which together gradually reversed the weak performance in the first quarter.

China's trade with major partners gathered steam during the first half. Trade with the European Union saw the largest year-on-year growth of 9.6 percent, accounting for 14.4 percent of China's total foreign trade.

Its trade with the United States increased by 2.8 percent in the same period, followed by 2.6 percent with the ASEAN and 1.3 percent with Japan.

However, trade between the Chinese mainland and Hong Kong dropped 24.1 percent from a year ago due to a high base figure in the corresponding period last year.

Wang Xiaoguang, macro analyst under the Chinese Academy of Governance, cited other positive factors including the depreciation of the yuan and the stable recovery of the domestic market.

A report from the Bank of Communications also attributed the improvement in trade figures to the ending of the effect caused by the large base figures of last year.

Weighed down by shrinking external demand, China's total foreign trade was disappointing in the Jan.-March period, with exports down 3.4 percent, adding to concerns over the country's economic strength.

Along with an array of lackluster leading indicators, China's GDP growth slipped to 7.4 percent Jan.-March, the lowest quarterly expansion since the third quarter of 2012.

But the world's second-largest economy is looking up thanks to prompt actions from the central government. Among them was a guideline unveiled in May from the State Council, China's Cabinet, to support foreign trade through tax breaks, easy financing and efficient customs clearance.

Zheng expects export growth to accelerate in the third quarter as the global economy will gradually pick up and China's stabilizing measures will continue to take effect.

Wang predicted that trade growth will be between 5 percent and 10 percent in the next few months, with moderate fluctuation likely but no substantial increase.

China is seeking new engines for its foreign trade. The China (Shanghai) Pilot Free Trade Zone is thriving since it was founded in October 2013, cooperation centered on the Silk Road Economic Belt and 21st Century Maritime Silk Road has made steady progress, and free trade agreement negotiations are accelerating all around the world.

The less-developed central and western parts of China also brought new hope to the country's foreign trade. Their eighteen provincial-level regions posted a trade volume of 1.6 trillion yuan (260 billion U.S. dollars) in the first half, and, most importantly, grew at a striking pace of 17.5 percent.

A large proportion of export-oriented labor-intensive industries have become robust again in China's central and western regions with lower operation and labor costs.

However, Zheng admitted there will be "arduous tasks" ahead to meet the trade growth target of 7.5 percent this year, as the country is still confronted with a grim and complicated situation.

Although developed countries may have turned the corner, weak performances from emerging economies like Russia and India will create uncertainties for China's exports, Wang added.