China trade activity improved significantly in June, in a positive sign for growth prospects in H2 2015. Exports rose 2.1% from last year. 2.1% may not seem like a big number, but given the yuan's rally vs. major trading partners (up 19% against EUR, and up 18% vs. JPY), it is a very solid number. Rising exports after a massive currency appreciation is a pretty big feat.
Imports dropped 6.7% from last year on a value basis, much better than the 18% annual decline in May. But, factoring in the drop in commodity prices over the last year, import volume was probably up around 3% on the year. Much of the improved import number was due to the reduction in consumer goods tariffs in May. Commodity demand was mixed.
Things to note about China's trade numbers:
- Exports to the US rose 12% from last year.
- Exports to Europe declined 3% from last year.
- commodity import demand was mixed: Iron ore 0% change from last year, copper down 2%, but crude oil imports surged 27% from last year. Coal imports dropped 34% from last year.
- Most of the export gains went to countries along the Asian manufacturing supply chain, in a positive sign for Asian growth prospects.
- Imports from commodity countries continued to drop, primarily on price declines.
- Import tariffs were cut for a number of consumer goods in May, adding to June import demand.