China Economics：Dip in Exports and Jump in Imports Likely Transitory

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - July's exports were likely affected by extreme weather conditions, particularly impacting labor-intensive exports, while imports saw a significant one-off increase [2][3] - The overall outlook remains a soft landing for the global economy, with exports expected to continue supporting growth despite recent declines [3][4] - The increase in imports in July was attributed to volatility in tech imports and a favorable base effect for certain commodities [5][6] Summary by Sections Exports - July's nominal exports fell short of expectations, recording a growth of 7.0% compared to a consensus of 9.5%, with a notable month-on-month decline of 3.2% [4] - The decline was primarily driven by labor-intensive, lower value-added consumer products, which dropped by 6% [4] - Adverse weather conditions, including the highest average temperature since 1961 and significant rainfall, likely contributed to the production challenges [4] Imports - Nominal imports exceeded expectations, rising by 7.2% year-on-year, a significant increase from -2.3% in June [5] - The surge in imports was influenced by high-tech products, which saw growth rates of 15% in July, and electric products, which grew by 18% [5] - Overall, the import trend remains stable, with a three-month moving average of 2.2% year-on-year, aligning with year-to-date growth of 2.8% [5] External Demand - Despite signs of a slowing US economy, the global economist's base case suggests resilience in the US economy [6] - Both official and Caixin PMI indicate softer but still robust new export orders, with expectations for export growth to rebound in August [6]