China's exports unexpectedly returned to growth in July on improved global demand despite escalating US trade pressure, but the rebound may be short-lived as Washington prepares to slap even more tariffs on Chinese goods.
Analysts say a sharp drop in the yuan currency this week may offer only limited help for Chinese exporters, who are facing additional US levies next month, shrinking profit margins, and sputtering demand worldwide.
July exports rose 3.3% from a year earlier, the fastest since March and more than the most optimistic estimate in a Reuters poll, customs data showed on Thursday.
Analysts had expected a 2.0% drop after June's 1.3% fall.
But imports remained weak, declining 5.6% and highlighting sluggish domestic demand as China's economy struggles to get back on firmer footing. Still, the drop was less than anexpected 8.3% and June's 7.3%.
The better-than-expected trade readings helped buoy Asian stock markets, which suffered a heavy selloff earlier in theweek as the Sino-US trade war intensified and the yuan skiddedto 11-year lows.
While China's exports to the US continued to shrink inJuly in the face of stiffer tariffs, shipments picked up toEurope, South Korea, Taiwan and, most noticeably, Southeast Asia.
"It could suggest that some exporters are trying todiversify their export regions, it could also be due tomanufacturers' relocations to ASEAN (from China)," said Betty Wang, a senior China economist at ANZ.
"This hopefully can offset some of the downside risks fromthe U.S. China bilateral trade."
Washington is clearly watching shifts in China's trade patterns as the trade dispute wears on. The United States recently warned Hanoi that some export goods labelled "Made in Vietnam" were of Chinese origin.
An official Chinese think tank attributed the rise inexports partly to Beijing's Belt and Road initiative, a programme that aims to boost business and trade ties with dozens of countries across the world.
