China economic activity continues to beat expectations

HONG KONG - China trade data came in stronger in June, and higher than market expectations. In dollar terms, export growth was 11.3% y-o-y while imports lifted 17.2%. Machinery and electronics and high-tech products continued to be the main drivers for exports, while resilient demand for capital goods and crude oil were behind the strength in imports.

Kelvin Lam, Greater China Economist for HSBC, believes industrial upgrading in China and stronger global demand will support export growth in the coming quarters.

Ordinary exports grew in June by 6.2% y-o-y, compared with 3.4% y-o-y in May, while processing exports rose by 10.8% y-o-y, compared with 6.7% in May. Exports to G3 countries rose by 15.8%  compared with 9.7% in May, and exports to non G3 countries came in at 4.7% compared with  2.8% in May.

June import growth came in at 17.2% in USD terms compared with 14.8%  in May, with ordinary imports rising 19.0% compared with 17.1%.. Processing imports rose by 15.9% compared with 11.2% in May.

In value terms, imports of iron ore, coal, crude oil and copper grew by 21.4%, 58.2% , 33.3% and 22.4%, compared with 34.1%, 85.3% , 50.3% and -5.3% (all y-o-y ) respectively in May. • In volume terms, imports of iron ore, copper and crude oil rose by 16.0%, 4.4% and 17.9% (all y-o-y) respectively, compared with 5.5%, -19.6% and 15.4% respectively in May.

Imports of coal fell by 0.7% y-o-y vs. +16.6% y-o-y in May.  www.hsbc.com (ATI).