China Grows Amidst Trade Wars

Picture Credit: knowledge.wharton.upenn.edu

Despite ongoing trade tensions and shifting global dynamics, China ended the first half of the year with a record trade surplus of approximately $586 billion, showcasing its ability to adapt and expand. This resilience was underscored by a 5.8% year-on-year increase in exports for June, totaling $325 billion, outpacing analysts' expectations. Imports also saw a modest 1.1% rise — their first growth since February — signaling a cautiously optimistic rebound.

While exports to the US fell by 16.1% compared to last year, following a sharper 34% decline in May, Chinese companies skillfully pivoted to new markets. Exports to ASEAN countries surged 17%, helping to cushion the impact of waning American demand. “China’s trade resisted pressure and progressed,” stated Wang Lingjun, deputy head of China’s customs agency, even as he warned of a deteriorating global trade environment.

Picture Credit: businessinsurance.com

The adaptability of Chinese factories — redirecting exports away from the US — has supported the slowing domestic economy during a volatile time. However, future gains may be limited. The US recently imposed new tariffs, including a 50% levy on copper imports and additional sectoral duties effective August 1. Though US tariffs on Chinese goods have eased from 145% to about 55%, Beijing still faces evolving risks from Washington’s tougher stance.

Further complicating matters, a new US-Vietnam trade agreement imposes a 40% duty on goods suspected of transshipment — a strategy Chinese exporters have long relied on. This could hurt China’s direct exports and its role in global supply chains. Still, with discussions ongoing between US and Chinese officials and continued strong exports, economist Zhiwei Zhang believes China remains on track to meet its 5% GDP growth target for the second quarter.