Strong China export growth：merchandise trade or supply chain reconfiguration？

Investment Rating - The report indicates an optimistic outlook on China's export growth, suggesting resilience in the face of global trade dynamics [2][17]. Core Insights - China's export value in USD terms increased by 4% year-on-year (yoy) in the first seven months of 2024, with a notable growth in export value in RMB terms (6.7%) and export volume (approximately 15%) [2][17]. - The trade surplus in 7M24 rose by 11% yoy, contributing positively to GDP and corporate profit growth [2][17]. - The report highlights the significant role of intermediate goods in China's export structure, which accounted for about 50% of total exports in 2023 [20][26]. Summary by Sections I. Overseas Production Expansion - A Perspective of Intermediate Goods Trade - Intermediate goods exports surged post-2020, making up half of total exports in 2023, with double-digit annualized growth in semi-finished products and components [5][20]. - Key categories of intermediate goods include telecommunications equipment, electronic components, textiles, steel, batteries, and auto parts, which collectively represent over 70% of exports [5][22]. - The share of intermediate goods exports to Southeast Asia has increased significantly, while exports to the US have contracted since 2018 [22][34]. II. Progress in Overseas Plant Construction - A Perspective of Raw Material and Machinery Exports - Southeast Asia remains the primary destination for China's construction machinery exports, with notable growth in exports to Brazil and Mexico in 2024 [7][55]. - China's steel exports have seen robust growth, particularly to Southeast Asia and the Middle East, with a significant increase in construction machinery exports reflecting overseas investment [51][58]. - The report notes a rebound in the export volume of construction machinery, indicating a fresh round of overseas expansion by Chinese enterprises [53][56]. III. ASEAN and Latin America as Destinations for Overseas Expansion - In 2023, China's overseas direct investment (ODI) achieved structural growth, with ASEAN and Latin America receiving the most investment, accounting for 28% and 25% of ODI, respectively [9][75]. - The report emphasizes the increasing trend of Chinese investment in the Middle East and Africa, alongside a decline in investment in the US and Europe [75][77]. - The Belt and Road Initiative is expected to enhance cooperation between China and countries in Asia, Africa, and Latin America, further supporting overseas expansion [75][76].