China sees strong imports and exports data for June, but U.S. tension widen trade surplus

China saw positive customs data on Tuesday, raising hopes that the world’s second-largest economy is on the way to recovering from the COVID-19 pandemic.

Exports for June rose 0.5% year-on-year compared to an analysts’ forecast of a 1.5% drop and a decline of 3.3% in May.

Meanwhile, imports for June saw a 2.7% increase year-on-year, versus expectations of a 10% decline and a 16.7% drop in the month before.

However, gains were limited for the first half of 2020 and still remains below last year’s levels as new COVID-19 outbreaks had cities such as Melbourne and Hong Kong to tighten lockdown measures.  

Trade balance also decreased only to $46.42 billion, a less significant drop than the forecasted $58.60 billion for June and $62.93 billion and May. Growing U.S.-China tensions over a trade deal and Hong Kong’s decision to implement new national security laws on July 1 led to a wider trade surplus with the U.S.

Chief economist for greater China at ING Bank NV, Iris Pang told Bloomberg that an increase in the trade balance “could be the major support for the second quarter’s GDP growth”, even if the growth was limited.

Investors will now be eyeing a second batch of other Chinese economic data including a GDP report, which is due to be released on Thursday.