China’s exports and imports both rose in June, signaling that demand at home and abroad may have started to recover even as the pandemic continues to ravage the global economy.
Exports rose 0.5 per cent from a year ago, while imports expanded 2.7 per cent. Both had been forecast by economists to fall. The trade surplus shrank from a record-high in May to US$46.4 billion last month.
The surprising increases come as some developed economies started to reopen, with gauges for manufacturing activities across the globe improving in June. Shipments of masks and other medical supplies also contributed to the expansion of exports, and imports were helped by economic recovery at home.
“Demand for Chinese exports is improving in key markets like the U.S. and EU as lockdowns are being eased and consumer spending rebounds,” said Rajiv Biswas, chief Asia-Pacific economist at IHS Markit Ltd. in Singapore. “The strong rebound in PMI indexes for the U.S. and Eurozone in June signals further gradual improvement in Chinese exports in the second half of 2020, particularly as retailers start to place orders for the Christmas season.”
What Bloomberg’s Economists Say
A rise in imports “points to firmer domestic demand that could become more supportive of what’s so far been an industry-led recovery.” The recovery in domestic demand should continue, which would buoy imports in real terms, and the recent rise in commodity prices could buoy the nominal value of imports.
David Qu, Bloomberg Economics
However, even with the turn up in June, trade in the first six months of the year is still well down on the same period last year. Exports in dollar terms through the end of June were 6.2 per cent smaller than in 2019, while imports were 7.1 per cent lower.
In yuan terms, exports grew 4.3 per cent in June from a year earlier, while imports rose 6.2 per cent, the customs administration said Tuesday.
In the first half, exports of textile products including face masks surged by 32.4 per cent in yuan terms. Exports of medicines and pharmaceutical products, and that of medical equipment increased by 23.6 per cent and 46.4 per cent, respectively. Driven by the increase of people working from home, exports of laptops increased 9.1 per cent, according to the data.
Positive net exports will provide some support to Chinese gross domestic product growth in the second quarter, after the historic 6.8 per cent collapse in the first three months. The reading for GDP will be released Thursday.
Positive news aside, countries such as the U.S. still have a long way to go to get the outbreak under control and there’s no sign of when global demand for Chinese exports will recover sustainably to pre-virus levels. The deterioration of relations with the U.S. adds to the uncertainty for trade, although China has been stepping up efforts to meet the terms of the trade deal.
“Looking forward, we expect July data to see some weaknesses and exports to be under pressure in the second half of the year,” said Xing Zhaopeng, markets economist at Australia & New Zealand Bank Group Ltd.
–With assistance from Tomoko Sato, Yinan Zhao and Lin Zhu.
Canada worried by Biden’s ‘Buy American’ plans, will make issue a priority
OTTAWA (Reuters) – Canada is worried by U.S. President Joe Biden‘s plans for a “Buy American” program to boost domestic industry and it will be a priority for talks with the new administration, Finance Minister Chrystia Freeland said on Monday.
The two neighbors have highly integrated economies as well as one of the world’s largest bilateral trading relationshipsand Canada fears its firms could lose out if U.S. procurement rules are tightened.
Biden is expected to sign an executive order later on Monday to increase domestic manufacturing and close loopholes in existing provisions, which structure the $600 billion in goods and services the federal government buys each year.
“I am concerned. We are always concerned by ‘Buy American’ … for sure that is going to be an issue very very high on our agenda in our work with the Biden administration,” Freeland told reporters.
Canadian governments have had to deal with ‘Buy American’ provisions from previous U.S. governments only to discover “the devil is very often in the details,” she added.
“We find we are very often able to explain to our American partners that trade is in the mutual interests of Canadians and of Americans,” she said.
Biden’s first conversation with a foreign leader last Friday was with Canadian Prime Minister Justin Trudeau, who raised the “Buy American” issue and urged the President to “avoid unintended consequences that can hurt both countries,” a Canadian government source said.
(Reporting by David Ljunggren; Editing by Chris Reese and Paul Simao)
Opinion: Plant protein beckons as a key component of economic diversity – Calgary Herald
Article content continued
Alberta can add value through processing to many of our crops — fractionating the plants into ingredients such as protein, starch and fibre that will then be exported or further developed locally into commercial products for food, beverages, pharmaceuticals, nutraceuticals, cosmetics, pet food or livestock feed.
Take peas alone: if we process 35 per cent of the average pea crop grown in Alberta, it will add an additional $1 billion annually to the provincial economy compared to just exporting the crop as a bulk commodity.
But there is growing competition globally in plant-ingredient processing and there is already disparity within the Prairie provinces.
In Western Canada, $1 billion has been invested into protein processing plants in the past few years. However, Alberta has not yet announced a single commercial facility that extracts pea protein, even though our farmers grow nearly half of the field peas in the West. Every tonne is exported.
Alberta is at risk of letting this moment pass us by while others move ahead decisively.
What needs to happen?
First, and most importantly, the provincial government must make the plant-ingredient processing sector one of its top priorities.
Developing a plan is key. Elected officials and bureaucrats at all levels need to demonstrate a depth of knowledge — publicly and in private negotiations — backed with a clear strategy and a true commitment. Premier Jason Kenney and Agriculture and Forestry Minister Devin Dreeshen have said agriculture will drive economic recovery and have allocated funds for investing in value-added processing. Focusing on a cohesive plant-based strategy and making it a government priority will ensure we seize this realistic chance to diversify.
Japan’s economy to recover to pre-pandemic levels in 2022, Bank of Japan’s Kuroda says – The Globe and Mail
Japan’s economy will likely recover to levels before the coronavirus pandemic as early as March next year, Bank of Japan Governor Haruhiko Kuroda said on Monday, offering an upbeat view on its recovery prospect despite headwinds from COVID-19.
Kuroda also said a combination of expansionary fiscal and monetary policies have successfully stabilized Japan’s economy, signalling that the BOJ has offered sufficient stimulus for now to cushion the economic blow from the health crisis.
“Both fiscal and monetary policies have been successful in preventing corporate failures and unemployment,” Kuroda told a virtual meeting of the World Economic Forum.
“We expect, probably by the end of fiscal 2021 or early fiscal 2022, that Japan’s economy would recover and come back to levels before the pandemic started,” he said.
In its latest quarterly projections released last week, the BOJ expects the world’s third-largest economy to expand 3.9% in the fiscal year beginning in April, followed by a 1.8% increase in fiscal 2022.
The key challenge for policy-makers would be to prevent the pandemic from leaving a lasting scar on the economy, and to provide impetus to growth such as by promoting digitalization and a “green” economy, Kuroda said.
“Greening the economy…was important before the pandemic. But now it’s more important. It would make our economy more sustainable. At the same time, it would provide some growth impetus,” he said.
After suffering its biggest postwar slump in April-June last year, Japan’s economy has been recovering moderately from the pandemic thanks to a rebound in exports and output.
But a resurgence in infections has forced the government to declare a new state of emergency in January, threatening to cool consumption and push the economy back into recession.
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