China's trade surplus narrowed to $112.5 billion from $125.62 billion in June. Its trade surplus with the United States narrowed slightly to $28 billion in July from $28.86 billion the previous month.
Exports to the U.S. rose 17% from the same month last year. Outbound shipments to the European Union rose 16%, while imports from the bloc dropped 1.4%. Trade with South Korea maintained robust growth in July, with exports up 46.6% and imports up 97.8%, on high-tech demand.
Chinese exporters and U.S. importers continued to front-load shipments in July as they expected Washington's tariffs on Chinese goods to go up after the expiry of a 10% temporary global levy in late July, said Xu Tianchen, a senior economist at the Economist Intelligence Unit.
In July, the U.S. imposed a new 12.5% tariff on Chinese imports after the 10% levy expired, part of a broader tariff campaign targeting trading partners Washington says have failed to curb forced labour. A separate U.S. investigation into trading partners' excess capacity will likely raise tariffs further.
Chinese officials have repeatedly pledged to expand imports and promote balanced trade, yet the country's trade surplus, on track to top $1 trillion for a second year, continued to unnerve trading partners concerned about disruptions to their own domestic industries.
The European Union has been weighing tougher measures to curb its trade deficit with China, while Beijing's ties with Washington have shown signs of strain as they hit each other with trade restrictions and other measures ahead of an expected leaders' summit in September.
With exports booming and factories humming, policymakers may feel more comfortable delaying policies to boost household income and strengthen social security systems to address entrenched weakness in domestic demand.
Macquarie analysts said Beijing's policy support for domestic consumption and the property market would remain restrained as long as exports and manufacturing could help the economy achieve policymakers' annual growth target.
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