Citigroup: China's exports show resilience again, expected to continue in the second half of the year, with import growth reflecting a stabilization in domestic demand

China's June exports once again demonstrated resilience, with Citigroup expecting this momentum to be maintained while signaling a stabilization in domestic demand.

The General Administration of Customs announced on Monday that China's exports in June increased by 5.8% year-on-year in USD terms. According to the Chase Trading Desk, Citigroup stated in its latest research report that this level is higher than the bank's estimate of 3.3% and the market consensus of 5%. Thanks to the easing of the China-U.S. trade situation, the contraction in exports to the U.S. significantly narrowed to -16.1% in June, a substantial improvement from -34.5% in May.

Citigroup analysts stated, the resilience in exports stems from transshipment trade, supply chain extension, and new market demand, while the trend of rising imports reflects improvements in domestic demand, which may support a stable economic growth trajectory.

Export Growth Exceeds Expectations, Driven by Multiple Factors

Citigroup pointed out that the growth in June exports is mainly attributed to the easing of the China-U.S. trade situation and strong demand from non-U.S. markets, with expectations that exports will remain resilient in the second half of the year.

The bank's high-frequency tracking shows that the export volume to the U.S. has preliminarily bottomed out.

By trade partner, exports to ASEAN grew by 16.8%, with Thailand and Vietnam exceeding 20%, contributing nearly half of the overall growth. Exports to Africa maintained a high growth rate of 34.8%, becoming a key driver.

By product, automobile exports surged by 23.1%, while integrated circuit exports slowed to 24.2%, but still accounted for the largest contribution. Mechanical and electrical products grew by 8.2%, and labor-intensive products rebounded to 0.4%. Citigroup emphasized that transshipment trade to the U.S., supply chain extension to ASEAN, new demand from Belt and Road countries and Africa, as well as China's export competitiveness supported this performance.

Imports Recover Growth, Domestic Demand Signals Stabilization

In June, imports increased by 1.1% year-on-year, marking the first positive growth this year. Citigroup believes this reflects a steady recovery in domestic demand.

By product, commodities such as oil and coal dragged down imports, but integrated circuits and computers provided support. Integrated circuit imports accelerated to 11.5%, becoming the largest contributor to growth; mechanical and electrical imports rose to 6.0%, while high-tech products slowed to 9.6%; coal and soybean imports continued to decline; automobile imports further decreased by -36.3%.

By partner, imports from Japan surged by 10.8%, imports from ASEAN increased slightly by 0.1%, with Indonesia and Thailand growing by 23.5% and 20.0% respectively. Imports from the United States remained stable at -15.5%, while those from the European Union rose slightly by 0.4%