Prime Highlights
- China’s economy showed signs of improvement in June as manufacturing, retail sales and exports to the US recovered.
- Businesses increased shipments to the US ahead of possible tariff changes, boosting factory activity and export growth.
Key Facts
- The China Beige Book is an independent survey that tracks business conditions across China using company responses from multiple industries.
- China is expected to release official June trade, retail sales, industrial output and second-quarter GDP data in the second week of July.
Background
China’s economy showed signs of improvement in June, supported by stronger manufacturing activity, recovering retail sales and a rebound in exports to the United States, according to an independent business survey.
The China Beige Book, based on responses from 1,321 businesses during June, reported that factory activity accelerated while retail spending improved. Luxury goods sales increased, although tourism-related spending remained weak. The report said the positive trend would need to continue through July and August before confirming a sustained economic recovery
Manufacturing gained momentum as shipments to the US increased sharply. China’s exports to the US rose in April and May after declining for much of the previous year, as businesses accelerated deliveries ahead of the possibility of higher US tariffs. Freight rates on shipping routes between Asia and the US also climbed to their highest level in nearly two years due to increased demand.
Economists said the improvement was largely driven by stronger external demand. They added that rising demand for artificial intelligence-related products and lower oil prices could help reduce pressure on the Chinese economy in the coming months.
While exports to the US strengthened, growth in export orders from other Asian and developing markets slowed in June, while demand from Europe remained stable.
China is expected to release official trade figures in the second week of July, followed by retail sales, industrial production and second-quarter gross domestic product data. Analysts also expect the official manufacturing purchasing managers’ index to return to expansion territory, reflecting improving business activity.
Despite the recent gains, economists said the durability of the recovery will depend on continued export demand and stronger domestic consumption.
