Strong plus in Russia trade: China's exports increase unexpectedly

Strict corona lockdowns and a real estate crisis are causing problems for the Chinese economy.

Strong plus in Russia trade: China's exports increase unexpectedly

Strict corona lockdowns and a real estate crisis are causing problems for the Chinese economy. Nevertheless, exports rose surprisingly sharply in July. Foreign trade is developing primarily with Russia, while German exporters benefit significantly less from business with China.

Stronger-than-expected export growth is fueling the Chinese economy's recovery. Exports in US dollars rose 18 percent in July compared to the same period last year, according to Chinese customs officials in Beijing. Experts had actually predicted a slowdown in export growth. A similar increase of 17.9 percent was recorded in the previous month. China's imports, on the other hand, grew slightly less than expected by 2.3 percent in July.

Chinese trade with Russia developed particularly strongly, increasing by 37.1 percent. China's imports from the neighboring country - which is subject to international economic sanctions for its invasion of Ukraine - rose by 49.3 percent. China imports a particularly large amount of energy from Russia. Chinese exports grew by 22.2 percent. In the Ukraine war, the communist leadership is on the side of Russian President Vladimir Putin.

According to this information, Germany's exporters continue to suffer from a decline in German exports to the second largest economy. China's imports from Germany fell 6.7 percent. On the other hand, Chinese exports to Germany continued to rise by 17.6 percent. The trend in trade with Europe is similar: China's exports to the European Union even increased by 23.2 percent, while imports from the Community fell by 7.4 percent. China's exports to the US also rose 11 percent, while imports of American goods - similar to Germany and the rest of the EU - fell 4.5 percent, according to customs data.

"China's export growth surprised again on the upside," Zhang Zhiwei, chief economist at Pinpoint Asset Management, told Bloomberg. "Strong export growth will continue to help China's economy in a difficult year, while domestic demand remains weak." The strong export growth will also boost confidence in China's currency and help prevent capital outflows. Overall, China posted a trade surplus of $101 billion in July.

Strong exports are a major contributor to China's growth, which was severely disappointing in the second quarter, up just 0.4 percent year-on-year. The reasons are the repeated corona outbreaks and the lockdowns and other restrictions imposed by China's strict zero-Covid strategy. The economy is also suffering from the biggest crisis to date in the real estate sector, which has also always been a major driver.

According to experts, declining global demand and high inflation in other countries are increasing the uncertainties for China's exports, which could also affect the recovery in China. The Chinese government originally set a growth target of 5.5 percent for this year, which now seems increasingly unrealistic. At a recent Politburo meeting, there was only talk of striving for the "best possible result" for growth. The International Monetary Fund (IMF) recently predicted only 3.3 percent growth for China.

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