China's exports defy trade war headwinds in July as growth surges to 7.2%

The Star

11-08-2025

China's exports continued to accelerate in July as a fall in shipments to the United States was offset by growth in a range of markets, including Africa, Europe and Latin America, with chip exports surging by nearly 30 per cent, year on year.
The world's largest goods exporter saw outbound shipments rise last month by 7.2 per cent, year on year, to US$321.8 billion, according to customs data released on Thursday.
The figure was higher than the 5.8 per cent growth rate recorded in June and beat the 5.8 per cent growth forecast in a market survey by the Chinese financial data provider Wind.
China's imports, meanwhile, rose by 4.1 per cent year on year last month, in a possible sign that the country's sluggish domestic demand is starting to pick up. A poll by Wind had predicted a 0.27 per cent growth for July.
That led China's trade surplus to narrow slightly to US$98.2 billion for the month.
The better-than-expected results come as China's vast export sector continues to face intense pressure from the ongoing US trade war, with the world's two largest economies yet to agree on a permanent deal to prevent tariffs from snapping back to the triple-digit levels seen in April and May.
China's exports remained robust throughout the first half of 2025 despite US tariffs, with a decline in American shipments offset by surging trade with Southeast Asia and several other markets. Analysts cautioned, however, that growth was likely to slow in the coming months as the impact of US trade measures gradually takes its toll.
In July, China's exports to the US continued to fall, with Chinese goods still facing an average effective US tariff rate of 41.4 per cent despite the trade truce, according to Fitch Ratings. Shipments declined last month by 21.7 per cent, year on year, compared with a decline of 16.1 per cent in June.
But China continues to benefit from robust demand for goods across a broad range of categories, including hi-tech products and electric vehicles.
China's exports of chips jumped last month by 29.2 per cent, year on year, while shipments of machinery and electrical products grew 8 per cent, year on year, both in value terms. The country shipped 694,000 vehicles in July – up 25.5 per cent compared with the same period last year.
The surge in China's chip exports was largely driven by front-loading, as manufacturers worried about the potential expiry of the US-China trade truce in August and the threat of steep new US tariffs targeting the chip industry, according to Gary Ng, a senior economist at Natixis.
On Wednesday, US President Donald Trump said the US would impose a tariff of about 100 per cent on chips imported from countries that were not producing in America or planning to do so.
Last month, exports to the Association of Southeast Asian Nations rose by 16.6 per cent, year on year, similar to the 16.8 per cent growth recorded in June. Outbound shipments to the European Union increased by 9.2 per cent in July, year on year – up from 7.6 per cent in June.
Shipments to Africa and Latin America also grew by 42.4 per cent and 7.7 per cent, respectively. The share of China's total exports going to countries involved in the Belt and Road Initiative rose slightly to 50.4 per cent in July, up from 50.23 per cent the previous month.
Analysts remain concerned about China's trade outlook, with uncertainty continuing to hang over the country's exporters as Trump presses ahead with his global trade war. The big question is how much China's exports will slow and how it would spill over to the rest of the economy
On Thursday, sweeping US tariffs targeting dozens of trading partners took effect, with levies ranging from 10 to 41 per cent. The steep new duties cover several of China's major export markets in Southeast Asia, with Washington also pressuring its partners to clamp down on transshipment by Chinese exporters.
Meanwhile, the US and China have yet to agree on a permanent trade deal. The two sides held a third round of talks in Sweden in late July, after which the Chinese side said they had agreed to extend the tariff pause beyond August 12. American officials, however, said an extension would first require Trump's approval.
The strong export growth in July was mostly due to a flattering base for comparison, said Huang Zichun, a China economist at Capital Economics.
'With the temporary boost to demand from the US-China trade truce already fading and tariffs on shipments rerouted via other countries now rising, exports look set to remain under pressure in the near term,' she said.
Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, shared the same concern, saying: 'The big question is how much China's exports will slow and how it would spill over to the rest of the economy.'
China's exports of rare earths, which have become a key source of leverage for China in its trade negotiations with the US and European Union, were down in July by 17.6 per cent, year on year, easing from a 46.9 per cent decline the previous month.
The country's imports of crude oil, meanwhile, surged by 11.5 per cent, year on year, to 47.2 million tonnes. It remains unclear how much of the oil was sourced from Russia, with Chinese authorities set to publish more detailed customs data on August 20.
After slapping a punitive 25 per cent tariff on Indian imports over its continued purchase of Russian oil despite his repeated warnings, Trump signalled on Wednesday that China could be next. - SOUTH CHINA MORNING POST