Exports from China may decline. What will happen to the Chinese economy and the yuan

Due to the slowdown in global demand CHINAmay face a reduction in EXPORT earnings - one of the key areas in the Chinese economy.This will generally negatively affect the country's economy and the yuan exchange rate.

The growth of China 's exports in July showed that the economy of the country, which has been suffering since the spring due to the active policy of "zero tolerance" to the spread of covid-19 , may receive good support in the form of foreign trade. According to the Chinese customs, the country's exports increased by 18% in annual terms, while analysts forecast 15%. Export growth in June amounted to 17.9%.

At the same time, imports grew only by 2.3% compared to last year, falling short of analysts' forecasts: import data reflects weak domestic demand.

The trade surplus (the excess of exports over imports) hit a record $101 billion in July, exceeding the $100 billion threshold for the first time. Last July, the difference was only $56.6 billion.

Shipments from China to ASEAN countries, the European Union and RUSSIA rose by 34%, 23% and 22% respectively last month.

“Trade data shows that Chinese factories continue to recover strongly from the latest omicron wave. Despite weakening global demand, export growth was largely driven by the normalization of manufacturing activity in places like the Yangtze Delta,” said David Chao, Global Markets Strategist for Asia Pacific at Invesco.

The Yangtze River Delta, a region that includes Shanghai and parts of Jiangsu and Zhejiang provinces, is a key center of foreign trade for China. A large number of industries and the world's largest commercial port are concentrated here. it contributes a lot to China's GDP.