By Erin Mendell

China's exports picked up momentum in July for the second straight month, as global demand recovered with the easing of coronavirus-related restrictions.

Underpinned by strong shipments of protective gear for the pandemic and electronic products to fulfill work-from-home demand, July's 7.2% increase from a year earlier was the fastest so far in 2020, according to data released by the General Administration of Customs on Friday. It beat June's 0.5% growth, in addition to a 0.1% increase expected by economists polled by The Wall Street Journal.

"After turning positive in June, July's export data showed an overall improvement in global demand," said Iris Pang, an economist with ING Bank in Hong Kong.

Exports to the Association of Southeast Asian Nations and the U.S., China's No. 1 and No. 3 trading partners, jumped sharply to post double-digit growth in July, while exports to the European Union, China's second-largest trading partner, reported a smaller year-over-year decline.

"External demand has indeed passed the most difficult stage," said UBS economist Ning Zhang, who predicted a mild recovery in China's exports in the second half of the year as Western economies reopen.

Meanwhile, China's imports dropped 1.4% from a year earlier in July, reversing a 2.7 % increase in June. That came in lower than economists' expectations for 1.0% growth. That meant its trade surplus widened to $62.33 billion last month, much higher than the $46.42 billion surplus in June and the $42.50 billion surplus that economists had expected.

Imports fell mainly because of falling commodity prices in July, as the volume of China's overseas purchases of crude oil, coal, soybeans and other products rose sharply, officials and economists said.

"We think that goods imports will gain further traction in the second half amid China's continued domestic recovery," said Louis Kuijs, an economist with Oxford Economics.

Economic activity in China rebounded across the board in June, helping its economy to post growth in the second quarter after a sharp contraction in the first three months of the year. While economists are optimistic about China's recovery for the remainder of the year, the intensifying confrontations between Beijing and Washington stoked concerns about its outlook.

Hours before China released trade data, the Trump administration announced sweeping restrictions on two popular Chinese social-media networks, TikTok and WeChat. The administration also recommended Thursday that Chinese companies with shares traded on U.S. stock exchanges be forced to give up their listings unless they comply with American audit requirements.

The U.S. and China's top trade negotiators have agreed to talk on Aug. 15 to assess Beijing's compliance with a bilateral trade deal signed in January, The Wall Street Journal reported this week.

China has fallen well short of its trade-deal promises to buy U.S. goods and services, according to the latest official data and economists' estimates.

In the first seven months of the year, China's total goods imports from the U.S. fell 3.5% from a year earlier to $67.71 billion, which is also well below the $87.46 billion for the same period in 2017, official data released Friday showed.

In the trade deal signed in January, Beijing committed to increasing its U.S. imports of goods and services by $200 billion in 2020 and 2021, compared with the level recorded in 2017 before the trade war began.

UBS's Mr. Zhang said that in the first half of the year, China reached only about 23% of the total purchase target it promised in the trade deal for the year. Though Beijing is committed to the deal and has accelerated purchases in recent weeks, it is nearly impossible for it to hit its target due in part to the coronavirus pandemic, he added.

To hedge overseas risks, Chinese leaders have in recent weeks pledged to strengthen the domestic market with more opening up to foreign investors and have guided the country's exporters to sell products at home.

Grace Zhu in Beijing contributed to this article.

Write to Erin Mendell at erin.mendell@wsj.com

(END) Dow Jones Newswires

August 07, 2020 05:32 ET (09:32 GMT)

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