China's exports, although rising, are falling below market expectations and analysts predict growth will likely slow in the coming months. (Source: Xinhua)

Exports, the main growth driver of China's economy in the first half of the year, rose 7 percent year-on-year to $300.56 billion in July 2024, slightly below the expected 9.5 percent growth and down from June's 8.6 percent gain, customs data showed on August 7.

This growth was also lower than the same period last year, when China's exports fell to their lowest level since February 2020, down 14.5%.

Meanwhile, imports rose 7.2% year-on-year, compared with a 2.3% decline in June. The world's second-largest economy's trade surplus in July reached $84.65 billion, compared with $99.05 billion in June.

In terms of trading partners, China's exports to the Association of Southeast Asian Nations (ASEAN) rose 12.15 percent year-on-year in July, while shipments to the US rose 8 percent, marking the third consecutive month of positive growth.

Notably, exports to Russia fell 2.81% year-on-year in July, while shipments to the EU increased 7.9%.

In the first half of this year, the export sector was still considered a "bright spot" in the context of slow domestic economic growth, contributing to the annual growth target of 5%. However, China's accusations of a trade surplus could cause the country to face trade barriers in the coming time. The EU's final decision on tariffs on electric vehicles from Asia's No. 1 economy will be announced later this year.

In addition, China's key exports could come under pressure from world events, especially after fears of a possible US recession sparked a major sell-off in global stock markets earlier this week, hitting consumer confidence.

The yuan also strengthened sharply this week, creating additional challenges for exporters.

“China’s export trade continued to recover in July, but the underlying impact is more difficult to quantify,” said Gary Ng, senior economist at Natixis Corporate and Investment Bank. “This means that weakening global demand and tariffs could further weigh on China’s exports going forward.”

If the dollar weakens and US economic growth slows, we could see exports, China's most impressive growth driver in 2024, slow in the coming months."

According to this expert, China needs to shift to the domestic market if it wants to achieve its growth target this year.

"With the rise of protectionism, global trade barriers have increased significantly. Due to the economic instability of major trading partners and changes in orders, China's overseas trade will continue to face pressure in the second half of the year," a commentary published in the People's Daily in late July predicted.