China posted stronger-than-expected June trade figures on Thursday, bolstered by firm global demand for Chinese goods and robust appetite for construction materials at home, but local curbs on lending could weigh on imports later this year.
Exports from the world’s second largest economy rose 11.3 percent from a year earlier, while imports expanded 17.2 percent, both beating analysts’ expectations, official data showed.
While exports benefited from solid demand for electronics and industrial goods, a growing trade surplus, particularly with the United States, may add to trade tensions as U.S. President Donald Trump seeks to boost activity in his country’s manufacturing sector.
An increase in trade between China and nuclear-armed North Korea in the first half of the year could also add to diplomatic pressures between Beijing and Washington.
Analysts say economic and political risks could undermine much of the strong trade momentum seen in the first half of this year.
“Looking ahead, we expect export growth to slow on uncertainties in external demand due to rising geopolitical risks and the stronger yuan-U.S. dollar exchange rate in the first half of 2017,” Nomura researchers said in a note after the data release.
China posted a trade surplus of $42.77 billion in June, slightly above analyst forecasts for a surplus of $42.44 billion and wider than May’s $40.81 billion.
Analysts polled by Reuters had expected June shipments from the world’s largest exporter to have risen 8.7 percent, in line with May’s growth. Imports were forecast to have climbed 13.1 percent, easing from the unexpectedly strong 14.8 percent jump in May.
The country’s demand for imports, particularly for industrial commodities such as iron ore and coal used to feed a construction boom, has remained robust in recent months. This is thanks mostly to resilient real estate demand in smaller Chinese cities with lax property rules as authorities are keen to clear a housing glut.
However, analysts say a slowdown in demand for materials from abroad may already be taking place.
“Looking ahead, exports should continue to do well given the relatively positive outlook for China’s main trading partners,” Julian Evans-Pritchard, China Economist at Capital Economics, said in a note.
“But we are skeptical that the current pace of imports can be sustained for much longer given the increasing headwinds to China’s economy from policy tightening.”
China’s exports denominated in yuan rose 15 percent in January-June from the same period a year earlier, while imports jumped 25.7 percent during the period.
Many economists still expect Beijing’s intensifying crackdown on unscrupulous lending and a cooling property market to translate to slower growth after a surprisingly solid first quarter.
China publishes its second quarter economic growth numbers on Monday. Economics polled by Reuters expect gross domestic product growth to have cooled to 6.8 percent from 6.9 percent in the first quarter as Beijing tightens the screws on financial risks.
Authorities have continued their campaign to reduce financial leverage in the economy while also maintaining stability in markets.