China has posted its biggest ever trade surplus with exports growing to $333 billion in July, new Chinese government data has revealed.
The total trade surplus reached $101.3 billion for the month, breaking the record previously set in June. Exports rose by 18% when compared to July 2021.
African commodities
An increase in trade between China and Africa was partly responsible for this boom, rising by 16.6% to $137.4 billion in the first half of this year.
A recovery in commodity prices, including oil, was a significant factor in this increase, according to the South China Morning Post.
Many African countries are resource-rich and supply vital commodities to China – such as oil from Angola, copper from Zambia, and cobalt from the Democratic Republic of Congo for batteries for electric vehicles and IT equipment.
China imported goods worth $60.6 billion from Africa in July, a 19.1% increase on equivalent 2021 figures, while exports to the continent increased by 14.7% to $76.8 billion.
Unsustainable
However, Bloomberg reports that economists are warning the export surge likely won’t last forever.
“The health of China’s economy in the second half of 2022 largely depends on whether domestic demand could take up the baton from the slowing external demand,” said Larry Hu, head of China economics at financial services firm Macquarie Group.
Economy slowing
Chinese domestic demand has remained sluggish this year as Covid outbreaks and lockdowns have kept people in their homes and deterred them from spending.
According to City AM, the Chinese government appears to have revised down expectations around its 5.5% GDP growth target, with reports last week stating that it should be viewed as a “guide.”
The International Monetary Fund recently predicted that China’s economy would grow by 3.3% this year.
New Taiwan manoeuvres
Fresh military drills around Taiwan have been announced today (8 August), despite signs that shipping in the Taiwan Strait was returning to normal, reports Al Jazeera.
The Taiwan Strait is a key route for supply chains and commodities, and had faced uncertainty and delays since Beijing started military drills. The activities were initiated following Nancy Pelosi’s trip to Taiwan last week.
Some shipowners barred their vessels from the strait, while others navigated around the drill zones.
Belt and Road debts
Meanwhile, a Financial Times examination of China’s Belt and Road Initiative has revealed a growing level of debt in countries associated with the project, which is causing a rethink of Chinese investment strategy and sparking concern in global financial institutions.
Beijing has invested $838 billion in developing countries’ infrastructure since 2013 in a bid to increase Chinese influence.
According to data collected by US research company Rhodium Group, the total value of loans from Chinese institutions, that had to be renegotiated in 2020 and 2021, surged to $52 billion – more than three times the $16 billion of the previous two years.