During a summer that’s been a boon for free trade despite a looming escalation in trade wars, and the possibility of a second Trump administration, China’s agricultural imports dropped 4.9% year-on-year in July to $17.8 billion.
The trend reflects China’s regulatory practices, strategic protectionism, and shifting demographics. China has blocked some U.S. beef imports because of a prohibited feed additive, the sector is a favorite avenue of retaliatory actions, and the country’s population has recently started to contract. Purchases of meat fell 32.1% to $1.8 billion. Imports of fresh or dried fruit declined 20.4% to $1.1 billion. Imports of grain and soybeans both rose a few percentage points by quantity but fell around ten percentage points by value. Agricultural exports increased 1.9% to $8.3 billion.
Overall China’s exports rose 7% year-on-year in July to $300.6 billion, while imports increased 7.2% to $215.9 billion. The strong trade figures surprised many observers. The U.S. and European economies have been surprisingly resilient in 2024, and inflation has been waning. Another factor: Purchasing managers are stocking up in anticipation of punitive trade actions. The EU last month imposed temporary tariffs of up to 37.6% on imports of electric vehicles from China. It’s expected to make them permanent this fall. The U.S. is preparing tariffs on a host of Chinese high-tech goods. Vincent Clerc, the CEO of shipping giant AP-Moeller-Maersk, told the Financial Times that their customers were “bringing orders forward” because “of the potential for a trade war, people would rather have Christmas goods already in the warehouse.”
Demand in Western markets appears strong despite the risk of economic recession spotlighted by Monday’s stock market hiccup. Exports to the EU increased 8.4% to $45.8 billion, while shipments to the U.S. increased 8.2% to $45.8 billion. By comparison, exports to ASEAN countries increased 12.5% to $46.9 billion.
However, there are signs that consumers around the world are feeling less prone to spending money in their pockets than they were during the heady days of Covid stimulus payments. Exports of furniture dropped 5% to $4.7 billion. Shipments of suitcases increased 5.2% by quantity to 311,145 Tons but fell 11.1% by value to $2.7 billion. Shipments of toys fell 3.6% to $3.7 billion. The same demographic crunch that could pose a risk to China’s appetite for agricultural products is likely in the long run to hurt China’s competitive advantage in manufacturing these low-tech products. Labor is likely to get squeezed, especially as the country capitalizes on its growing edge in high-tech goods, include solar panels and electric vehicles.
Despite the moves by U.S. and European policymakers to levy tariffs on Chinese imports, the country’s high-tech sector is still strong. Exports of motor vehicles increased 13.8% to $10 billion, while shipments of high-tech products rose 12.1% to $74.9 billion. Exports to Africa fell 7.1% to $13.5 billon, while imports from Africa increased 2.9% to $8.9 billion.
On the import side, the highlight was a boom in imports from the U.S., which increased 23.7% to $14.9 billion. The preliminary report doesn’t break out countries by specific product, but according to an analysis by Trade Data Monitor, in the 12 months between July of 2023 and June of 2024 included, the top Chinese imports from the U.S. included semiconductors, petroleum, copper, cars and fresh fruits and nuts.
Imports from the EU rose 7.5% to $24.9 billions, while purchases from ASEAN nations rose 11.4% to $33.3 billion. Imports of high-tech products rose 18.6% to $66.7 billion.
China’s appetite for industrial goods, an important bellwether for the global economy, appears solid. Imports of coal increased 17.5% to $4.5 billion. (It also rose by roughly the same amount by quantity.) China ramped up imports of iron ore and copper quantities by roughly 10% each.