Chinese exports are no longer limited to medical masks and hospital gowns (IPE), suggesting that demand for other parts, from shoes to electronics, is increasing.
China’s exports surprised to the upside last week with shipments up by 7.2% annualized in July, beating both June’s performance and the consensus forecast on Bloomberg which was way off at -0.6%. Pandemic-related demand for medical goods continues to be strong, with medical grade masks and PPE equal to around 10% of total exports. That segment is up 51% year-over-year in July but is in decline from the 60% growth rate in June.
Barclays estimates that the two categories of pandemics contributed about 2.7% to July exports, down from 3.3% in June.
But the news is that the call is recovering in other areas. Computer materials were needed, and exports of automatic data processing machines are now in positive territory.
“The strength of exports has been driven by the recovery in non-Covid exports, while economies continue to reopen,” said Jian Chang, Barclays’ senior economist in Hong Kong.
Excluding pandemic-related exports, Chang says other exports first rose in July. Non-pandemic exports contributed 3.3 points to chinese export growth.
In recent export figures, a sharper contraction in certain customers’ exports of goods to the United States, adding clothing and footwear. Plus a resumption of exports to major trading partners.
A new request similar to reopening has emerged. Bicycle exports rose by up to 40% year-on-year in June.
According to Chinese observers, better-than-expected July exports and new export orders for the PMI are at a four-month peak in GDP expansion in the part of the year.
Barclays expects it to accumulate by 5.6% on an annualized basis and end the year with a 2.3% increase, a good fortune if there has ever been one.
Look for non-pandemic exports that will continue to grow steadily, as China remains the center of production and will be sold when its economy reopens.
The biggest headwind is the accumulation of new cases in Australia, Japan and parts of Europe. This has not led to a circular of national closures, however, regional closures have further weakened sentiment between companies and portfolio investors who hope to return to a sense of normalcy during the fall.
I spent 20 years as a journalist for the most productive in the industry, adding as a member of the Brazilian-based staff for WSJ. Since 2011, I have focused on business and investing in