Minsheng Securities believes that China’s export resilience in the second half of 2022 may exceed expectations, with an expected year-on-year growth rate of 7.5%, and predicts that exports of four types of industrial supplies will perform better in the second half of the year. The first is the export of machinery and equipment; the second is the export of production materials; the third is the export of the automobile industry chain; the fourth is the export of the overseas new energy industry chain.
Key Points:
Since the outbreak, the market has been waiting for exports to decline. From 2020 to 2021, and from 2021 to 2022.
In fact, China’s exports have repeatedly refreshed market perceptions with a strong attitude, and the resilience is amazing. We can’t help thinking, is it necessary to reassess China’s export advantage?
Export resilience may still exceed expectations in the second half of this year
At the beginning of the year, the consumption of durable goods in developed economies led by Europe and the United States began to weaken, and the US recession is expected to heat up in the second half of the year. U.S. durable consumption is not only an important part of China’s exports, but also a leading indicator of the U.S. economic cycle. Based on this, the market deduces a global economic recession in the second half of the year and bears bear on China’s exports in the second half of the year.
In terms of indicator readings, we believe that China’s exports have a high probability of falling year-on-year, which is no different from market expectations. However, due to the strong competitive advantages of China’s exports, even if overseas demand cools (not a recession), the resilience of China’s exports in the second half of the year may still exceed expectations, with a slower downward slope.
The core conclusion of our judgment on exports in the second half of the year is that the growth rate of exports in the second half of the year remains relatively high. This may become one of the market expectations in the second half of the year.
There is no need to worry too much about the negative impact of the decline in durable goods consumption in Europe and the United States on China’s exports. The export potential of industrial supplies may be underestimated.
Both the proportion and contribution of durable goods in China’s exports are gradually declining.
In the first quarter of this year, durable goods are no longer the main driver of China’s exports (the year-on-year contribution to total exports has dropped to 3%).
The export potential of other commodities such as travel consumption and industrial supplies may be underestimated by the market.
Although the consumption of durable goods by residents in developed economies has weakened, areas such as residents’ travel consumption and overseas enterprise production are not weak. Residents’ travel and consumption have generated demand for commodities such as clothing; enterprise production and repair have generated demand for production materials (such as chemical raw materials), production equipment (such as special and general equipment), and electromechanical components. Production materials, production equipment and components are collectively referred to as “industrial supplies”. Although China’s exports of durable consumer goods to Europe and the United States are currently weak, travel consumer goods and industrial supplies are not weak. The export potential of these two categories of commodities in China, especially industrial supplies, has been underestimated by the market.
We are optimistic about the resilience of exports in the second half of the year, mainly because we are optimistic about the recovery of overseas production.
Compared with durable consumer goods, we should pay more attention to the export of industrial supplies (intermediate and capital goods) in the future.
In the first quarter of this year, the export of industrial supplies accounted for 52% of China’s total export, which has become the absolute main force. Since the second half of 2021, industrial supplies have contributed nearly 70% of China’s total exports year-on-year. In the first quarter of this year, the contribution of industrial supplies exports rose again, even exceeding 80%.
The stronger-than-expected export of industrial supplies is closely related to the current state of the global economy.
At present, industrial production in many countries has not recovered to the level before the epidemic. Whether it is developed countries, such as Germany, Japan, the United Kingdom, or emerging economies, such as Brazil and Mexico, the current global industrial production index is still lower than the pre-epidemic level (2019).
Experience shows that the production of global enterprises will continue to recover in the next 1-2 quarters, and China’s industrial supplies exports will be strong.
Historical experience shows that after the US consumption of durable goods weakens, global production will continue to be high for about half a year. Based on this, it is inferred that the overseas production repair is likely to continue throughout the second half of the year. The driving logic of industrial supplies exports may still run through China’s exports in the second half of the year, setting the tone for China’s export resilience in the second half of the year.
Re-examine China’s export advantages and reassess the resilience of exports in the second half of the year.
Reassess China’s export advantage under the current round of global epidemic disruption.
China has a full range of industries, and the industrial chain is very complete. The complete industrial chain means that China can produce products to meet the corresponding needs of overseas demand, whether it is residents’ consumption demand, travel demand, or enterprise production demand and investment demand.
As an exogenous shock, the impact of the current round of the epidemic on overseas is different from the general economic cycle: first, the economic shock under the impact of the epidemic, followed by policies to stimulate the expansion of demand for durable goods, and finally personnel mobility and production restoration.
Since the outbreak of the epidemic in 2020, the initial driving force of China’s exports was epidemic prevention materials, and then the export driving force was switched to durable consumer goods. Since the global epidemic has unfolded, China’s export driving force has gradually shifted to industrial supplies.
Since the epidemic, the driving force of China’s exports has been constantly changing, which is not only the source of China’s export resilience, but also perfectly reflects the rhythm of the impact of this round of epidemic on the global economy, as well as the export advantages of China’s entire industrial chain.
We estimate that the export growth rate in the second half of the year may be 7.5%, which is higher than the consensus expectation of the market in the low single digits.
We divide China’s exports into five categories: epidemic prevention materials, durable goods consumption, production equipment parts, production materials, and travel consumption. According to the seasonal performance and post-epidemic trends of each sector, it is finally estimated that exports in the second half of the year are 7.5% year-on-year, which is lower than the 14% in the first half of the year, but still higher than the market’s low-single-digit expectations.
Opportunities contained in export resilience in the second half of the year.
We are optimistic about China’s exports in the second half of the year, mainly for industrial supplies. It is predicted that exports of four types of industrial supplies will perform better in the second half of the year.
One is the export of machinery and equipment.Expansion of capital spending in overseas manufacturing and extractive industries requires the import of equipment and components from China.
The second is the export of means of production.China’s means of production are mainly exported to ASEAN. In the future, the continuous restoration of ASEAN production will drive the export of Chinese means of production. In addition, the price of means of production has a strong correlation with energy costs, and strong energy prices in the future will push up the export value of means of production.
The third is the export of the automobile industry chain.At present, the current situation of the automobile industry in overseas countries is in short supply, and it is expected that China’s exports of complete vehicles and auto parts are not bad.
The fourth is the export of overseas new energy industry chain.In the second half of the year, the demand for new energy investment overseas, especially in Europe, will continue to be booming.
The impact of China’s exports on China’s economy is reflected in many aspects. The stronger-than-expected export resilience in the second half of the year affects the macroeconomy and the capital market in at least two ways.
First, the strong export of industrial supplies means that China’s mid- and downstream manufacturing industries will have relatively good profitability support.
Second, the direction of China’s RMB exchange rate is determined by exports. If exports are strong, there will be no significant depreciation pressure on the exchange rate. The exchange rate is stable, and the negative disturbance of cross-border funds to the domestic capital market is limited.
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foreword
The global epidemic has lasted for nearly three years, and China’s exports have exceeded market expectations the most in the three years. Since the beginning of 2020, the market has frequently expected that China’s exports will decline, but every time China’s exports have used amazing resilience to dispel market doubts. The same is true in May of this year.
In May, the local epidemic in Omicron, China began to subside, and various economic indicators began to recover. The performance of the month has not been restored to before the epidemic. However, China’s exports hit 17% year-on-year in May, jumping from 15% before the outbreak.
The fast pace of export repair and the large year-on-year increase has once again refreshed market perception: exports in the second half of 2022 may be stronger than expected.
The importance of exports to China’s economy is self-evident. Looking forward to the second half of the year, where will China’s exports fall year-on-year, and where is the driving force behind expectations, these are the macroeconomic points that the market is urgently concerned about.
Macro indicators such as CPI and social financing have strong seasonal characteristics and high prediction accuracy. The factors affecting China’s exports are extremely complex, and it is difficult to predict the specific point.
Rather than predicting specific data points, we are more concerned about whether China’s export momentum in the second half of the year has been misjudged by the market.
The market generally expected the export momentum to continue to decline in the second half of the year, and the basis for the judgment was that the consumption of durable goods in overseas developed countries would cool down in the second half of the year. Because of the high concern about the decline in the consumption of durable goods in developed countries, the market even expects that exports in the fourth quarter of this year will fall to a negative value year-on-year.
However, exports from January to May this year once again exceeded our expectations, especially in the export structure in May, the exports of automobiles and new energy industry chains were extremely strong, and the exports of mechanical and electrical components also exceeded expectations.
To predict the macro economy in the second half of the year, perhaps what we need to do most is to reassess China’s export advantages.
1. In the first half of the year, China’s export structure and momentum began to change
1.1 Observation framework of China’s exports since the epidemic
The categories of Chinese exports are very complex, and analyzing Chinese exports requires a simplified framework.
China’s exports can be divided into five sectors: epidemic prevention materials, durable goods consumption, production equipment parts, production materials, and travel consumption.From 2020 to now, these five sectors have accounted for nearly 80% of China’s total exports. To predict China’s exports in the second half of the year, the focus is to observe these five sectors.
The reason why China’s exports are divided into five sectors is that the overseas demands corresponding to these five sectors are different. For example, anti-epidemic materials are related to the demand caused by overseas epidemics, and the consumption of durable goods is related to the purchasing power of durable goods of overseas residents.
Epidemic prevention materialsIncluding medical masks, gloves, shoe covers, protective clothing, medical equipment, disinfectants, testing reagents and other commodities, the strength of external demand is usually related to overseas epidemics.
consumer durablesIncluding furniture, some toys, consumer electronics such as mobile phones and computers, and goods such as automobiles. The strength of external demand is usually related to the income of residents in developed countries. In the past two years, the income of residents in developed countries has been affected by fiscal and monetary stimulus policies.
Production equipment partsIncluding all kinds of equipment, such as general equipment (machine tools, boilers, etc.), special equipment (excavators, etc.), as well as various mechanical parts and electrical parts (motors, batteries, cables and other parts). It corresponds to the demand for intermediate goods produced overseas.
means of productionIncluding steel, aluminum, chemical and chemical raw materials, refined oil, plastic raw materials, textile yarn, etc. They are raw materials for downstream production, and the demand is related to the start of overseas production.
travel consumer goodsIncluding clothing, leather, shoes, bags, etc. Their demand generally has a strong correlation with offline consumption scenarios. Only after travel resumes after the epidemic can its consumption rebound.
In the same-sex sense, automobiles are typical durable consumer goods. For the convenience of analysis, we classify automobiles as “production equipment parts”.
1.2 China’s exports follow overseas demand
The global epidemic has been developing for nearly three years. In the past three years, many changes have taken place in the overseas economy. The economic changes in different periods overseas will eventually lead to synchronous changes in China’s export library.
In 2020, China’s export focus will be on epidemic prevention materials and durable consumer goods. Since 2021, the focus of exports has begun to shift to travel consumer goods and industrial supplies (production equipment parts, production materials).
Specifically, we have seen the following changes in China’s five major sectors of exports since the outbreak:
The export of anti-epidemic materials shined in the early post-epidemic period, and after the epidemic dissipated, the export of anti-epidemic materials gradually declined.
The overall epidemic situation in overseas countries has stabilized, and the prevention and control strategy of coexisting with the virus has been gradually adopted, and the demand for epidemic prevention materials in overseas countries has continued to weaken.
Taking medical devices as an example, the export of medical devices dropped from 41.4% in the first half of 2020 to 5.7% in Q1 2022. It is expected that the follow-up export of anti-epidemic materials will further decline year-on-year.
After the overseas epidemic blockade was gradually lifted, travel consumption demand has grown significantly this year.
Major overseas countries have gradually loosened the epidemic blockade, and residents’ travel and consumption have been restored. From the second half of 2021 to the present, China’s travel consumer goods have continued to improve.
In 2022, the blockade index of major overseas countries will be greatly reduced. The export of travel consumer goods also reached 25.5% year-on-year in March, which is the highest monthly value in the past four years.
The withdrawal of stimulus policies in Europe and the United States has accelerated, and the consumption of durable goods (except automobiles) may weaken rapidly.
After the epidemic, the fiscal and monetary stimulus policies of Europe and the United States have greatly improved residents’ income, and the demand for durable goods will be high in 2020.
Beginning in the first half of 2021, U.S. financial subsidies will gradually withdraw, and residents’ income will gradually decline. This year, combined with a series of factors such as the rapid rate hike by the Federal Reserve, high inflation, and the substitution effect of service and non-durable goods consumption, signs of weakening of durable goods consumption have gradually emerged.
In 2022, the U.S. consumer confidence index has been falling all the way, with a reading of 59.1% in May hitting a ten-year low. Consumer spending on durable goods dropped sharply in March and April, by 0.2% and 1.4% year-on-year, respectively, the first time since the second half of 2020 that it fell below 10%.
With the acceleration of the Fed’s rate hike and balance sheet reduction process, the demand for durable goods in developed countries is also expected to drop rapidly in the second half of the year.
The repair of overseas production continued, and the export of Chinese production equipment parts and production materials continued to increase.
The trend of overseas production recovery has not been affected by the repeated global epidemics in the past two years. The capacity utilization rate of the United States and Europe has been repaired unilaterally upwards so far. The manufacturing PMIs of most major emerging economies also recovered to the booming range in May this year.
Driven by the demand for production repair, since Q2 2021, production equipment parts and production materials (mainly used in industrial production, hereinafter referred to as industrial supplies) contributed nearly 70% of the total export year-on-year. In Q1 2022, their export contribution has even further increased to over 80%.
2. Overly concerned about the downturn in durable goods consumption, or underestimating the resilience of China’s exports
The market is generally bearish on China’s exports in the second half of the year. The logical starting point is that the durable consumer goods of European and American residents will decline. We believe that over-focusing on the explanatory power of durable goods for China’s exports may underestimate the resilience of China’s exports.
2.1 The market is overly concerned about the negative impact of overseas durable goods consumption on exports
The consumption of durable goods by residents of overseas developed economies has begun to decline, and the market has judged that China’s exports will fall rapidly. This bearish logic has two starting points.
First,Durable goods are China’s important export commodities, and China’s durable goods exports are mainly to developed countries in Europe and the United States. The decline in durable goods consumption in developed countries will therefore drag down China’s exports.
second,Developed countries in Europe and the United States are consumption-oriented economies. Once the consumer demand of developed countries falls, their own economic momentum will decline, which will further drive down the global aggregate demand. Demand for other goods exported by China will also fall.
2.2 In fact, the decline in consumption of durable goods does not mean that exports have weakened by an equal amount
The consumption of durable goods in developed economies in Europe and the United States is indeed declining. However, the negative impact of durable consumer goods on China’s exports should not be overstated.
First, the contribution of durable goods to exports is gradually declining, and durable goods are no longer the main driving force for China’s exports.
The year-on-year contribution of durable goods to China’s total exports fell sharply, from 53.5% in 2020 to 22.4% in 2021. Contrary to durable goods, in 2021, the contribution of production equipment parts and production materials to total exports has exceeded that of durable goods.
We can also argue with country-by-country data. China’s durable goods exports are mainly to developed economies such as the United States and the European Union. The year-on-year contribution of Europe and the United States to total exports is also declining rapidly, from nearly 80% in the second half of 2020 to around 30% by the end of 2021.
Secondly, compared with the consumption of durable goods, we should pay more attention to the export of intermediate goods and capital goods.
China exports a lot of products, in addition to durable consumer goods, there are also capital goods and intermediate goods such as production equipment parts and means of production. These equipment parts and production materials are mainly used for overseas production.
In the first quarter of 2022, commodities such as production materials and parts and components accounted for 52% of total exports, accounting for more than durable consumer goods.
Finally, the weakening of durable goods consumption of residents in developed economies does not mean that all overseas enterprises have weakened production.
Taking the United States as an example, after the consumption of durable goods in the United States has weakened, global production will continue to be high for about half a year.
Before and after the economic crisis in 2008, the decline in consumer spending on durable goods in the United States led the decline in industrial production by one quarter; the decline in industrial production in the United States led Asia, Latin America, Africa, the Middle East and other countries by 1-2 quarters.
2.3 Export resilience in the second half depends on the recovery process of overseas production
Since the beginning of this year, the repair of overseas production, which is not the focus of the market, has become the main support for China’s exports in the first half of the year.
In the first half of the year, the commodities that contributed the most to exports were production equipment parts and production materials. In the first quarter, these commodities contributed more than 80% to China’s total exports year-on-year. Production material parts and production equipment are mainly used to meet the production and investment needs of overseas enterprises.
At present, industrial production in many countries has not recovered to the level before the epidemic. Under the caliber of the industrial production index, the production of developed countries such as Germany, Japan, and the United Kingdom and developing countries such as Brazil and Mexico have not recovered to the level before the epidemic (2019).
Judging from experience, there is a high probability that overseas production repairs will continue throughout the second half of the year. This laid the foundation for the resilience of China’s exports in the second half of the year.
3. Reassessment of China’s export resilience in the second half of the year
3.1 The export growth rate in the second half of the year may be 7.5%
Export commodities can be divided into five categories: epidemic prevention materials, durable goods consumption, production equipment parts, production materials and travel consumption. This classification is divided according to the demand characteristics of commodities.
In order to judge the total export growth rate, it is necessary to judge the export performance of the five sub-sectors separately.
Most commodity exports are generally seasonal, and we can use the year-on-year growth rate to characterize the strength of their demand. Since the epidemic, the quarterly performance of exports of various sectors has provided us with a reference.
The export of anti-epidemic materials is not seasonal, and the demand is more related to overseas epidemics. We speculate based on the progress of overseas epidemics.
It should be reminded that for the convenience of analysis, we take the automobile out of the durable goods and merge it into the production equipment parts for calculation.
The overseas epidemic situation has stabilized, and the export of anti-epidemic materials may be 0 month-on-month. It is expected that the export growth rate in the second half of the year will be -1.9%.
The export of anti-epidemic materials in Q3 and Q4 was -2.5% and -5.9% year-on-year, respectively.
The demand for durable consumer goods (excluding automobiles) has accelerated to fall, and the three-year compounded year-on-year growth rate in Q1 may be the center of normal growth. It is expected that exports in the second half of the year will be -18.7% year-on-year.
Exports of durable goods (excluding automobiles) in Q3 and Q4 were -15.3% and -22% year-on-year, respectively.
Travel consumption was further restored to Q3, and the momentum of Q4 was the same as that of Q3. It is expected that the export growth rate in the second half of the year will be 24.9%.
Exports of travel consumer goods in Q3 and Q4 were both 24.9% year-on-year.
The demand for production equipment parts remains resilient, and the kinetic energy is comparable to the second half of 2021. Exports in the second half of the year are expected to be 22.4% year-on-year.
The year-on-year growth rates of exports of production equipment parts in Q3 and Q4 were 20.2% and 24.5%, respectively.
Demand for means of production also remained resilient, but was also driven by rising raw material prices. Q3 exports further increased year-on-year, and exports in the second half of the year are expected to be 23.2% year-on-year.
Exports of means of production in Q3 are expected to rise to 31.8% year-on-year. Metal prices may fall in Q4, and exports are expected to be 15.4% year-on-year
3.2 Export resilience may be stronger than market expectations
The market expects that the year-on-year export reading in the second half of this year will drop quarter by quarter. Q4 is close to zero or even negative year-on-year, and the year-on-year export is in single digits.However, we predict that from the second quarter to the fourth quarter of this year, China’s quarterly exports will be 12.6%, 10% and 5.2% year-on-year, respectively. Exports for the year were 10.5% year-on-year, and exports in the second half were 7.5% year-on-year.
The result of our forecast is that the export momentum is significantly higher than market expectations.
Exports are in a downward cycle this year, but year-on-year readings remain at record highs.It is measured that the year-on-year export (10.5%) is second only to last year in the past 10 years. Even if you look only at the worse second half of the year, the year-on-year export reading (7.5%) is still a historical high (the highest year-on-year export reading was 7.9% in 2012-2017).
Compared with last year’s booming exports, the year-on-year decline in exports was not large.In 2021, Q4 exports will be as high as 19.7% year-on-year, this year’s Q1 exports will still be 15.8% year-on-year, and Q3 is expected to still be 10% year-on-year. In the first three quarters, the growth rate dropped by an average of 3.2 percentage points in a single quarter.
4. The restoration of global production in the second half of the year brings four opportunities for Chinese exports
4.1 One of the opportunities is the export of machinery and equipment
Overseas manufacturing and extractive industry capital expenditures require imported equipment and components from China.
The industrial production in ASEAN, the European Union and other economies is dominated by manufacturing, and the repair of the manufacturing industry drives the demand for general equipment (boilers, machine tools).
The extractive industry in countries such as Latin America, Africa and Australia is also the focus of industrial production, which will drive the demand for special equipment (excavators, etc.).
4.2 The second opportunity, export of means of production
Nearly one-fifth of China’s exports are means of production, such as textile yarn, refined oil, steel, chemical raw materials, textile yarn and plastic raw materials. Optimistic about the export of Chinese means of production in the second half of the year, mainly based on two reasons.
First,China’s means of production are mainly exported to ASEAN. It is expected that ASEAN’s production will continue to be repaired in the future, which will continue to drive the export of Chinese means of production.
second,The price of means of production has the strongest correlation with energy costs. At the moment of global economic inflation this year, upstream energy prices remain high. It is expected that the strong upstream energy prices in the second half of the year will drive the prices of production materials and increase the export value of production materials.
4.3 The third opportunity, the export of the automobile industry chain
Since 2020, the demand for automobiles in overseas developed countries has been relatively strong, and automobile production has maintained a high prosperity. We believe that there are three factors behind it.
One isLast year, the global automobile industry chain faced a shortage of cores. Since 2021, a considerable part of the automobile demand has not been met immediately, and the release of some automobile demand has been delayed.
two isResidential credit in developed countries in Europe and the United States supports the consumption of automobiles. The market is generally worried that the real income of residents in developed economies (especially the United States) will decline and their savings will be consumed, and they will not have sufficient purchasing power. In fact, the asset consumption momentum of the US residential sector is sufficient, and it is expected that there will still be strong demand for overseas automobile consumption in the second half of the year.
The third isOverseas mainstream auto companies are still in the process of repairing production. It is expected that the production of these auto companies will drive the export of Chinese auto parts in the second half of the year.
4.4 The fourth opportunity, the export of overseas new energy industry chain
In the first half of this year, the export performance of the new energy industry chain was very bright, driving the total export by about 3.2 percentage points year-on-year.
In Q1 2022, the export of new energy parts and components was year-on-year (21.5%), even higher than last year (compound year-on-year 16.7%). Driven by the export of the new energy industry chain, the growth rate of China’s exports to the EU in Q1 exceeded that to ASEAN and the United States.
It is expected that the demand for overseas new energy investment will continue to be booming in the second half of the year.
Europe and the United States have been more aggressive in green transformation, and they are the main importers of the global new energy industry chain.
After the Russia-Ukraine conflict, global energy prices fluctuated wildly. The EU is particularly dependent on Russia’s traditional fossil energy. About 40% of the imported energy, 30% of the oil and nearly 20% of the coal comes from Russia. The EU is even facing an energy supply crisis.
Europe and the United States have begun to accelerate the development of renewable energy to get rid of the dependence on traditional energy. In May 2022, the EU proposed the “REPower EU” energy investment plan, which will increase the proportion of renewable energy in 2030 from the original 40% to 45%. We believe that overseas new energy investment demand will not drop in the second half of the year.
V. Conclusion: Reassessing China’s Export Advantage
China’s exports remained resilient in the second half of the year. The reason why the market has repeatedly underestimated exports is mainly because of two factors:
First, the rhythm of supply and demand recovery of the global economy after the epidemic is misestimated.
In terms of experience, the consumption performance of durable goods in developed countries is of leading significance. When the consumption of durable goods in developed countries declines, the global economic cycle will also decline. From this point of view, it is found that the consumption of durable goods in developed economies in Europe and the United States is insufficient, and it seems that there is not much judgment bias in inferring that China’s exports will decline.
This time, however, was different. The epidemic since 2020 has completely disrupted the rhythm of the global economy. After the epidemic, the rhythm of economic recovery in developed and developing countries is different, and the rhythm of household consumption and enterprise production recovery is also different.In this case, the decline in the consumption of durable goods in developed countries does not necessarily mean that other economic momentum is also declining at the same time.For example, the travel demand of residents is being repaired, and the production of enterprises is being repaired, both in developed and developing countries.
Second, underestimate the biggest advantage of China’s exports – the advantage of the whole industry chain.
China has a full range of industries, and the industrial chain is very complete. The complete industrial chain means that China can produce products to meet the corresponding needs of overseas demand, whether it is residents’ consumption demand, travel demand, or enterprise production demand and investment demand.
For example, after the increase in overseas travel activities, the demand for automobiles has opened up, and China has been able to produce and export complete vehicles. Another example is the parts needed for overseas automobile production, which can also be produced in China. Even refined oil, a commodity that does not seem to have the characteristics of China’s resource endowment, is also exported by China, and the export value of China’s refined oil is not small.
The advantages of the whole industry chain superimpose the uneven recovery of the global economy after the epidemic. In this case, if you focus on the original economic cycle downturn indicator – the consumption of durable goods in the United States, it will underestimate the driving force of residents’ non-durable goods and enterprises’ production and investment to the global economy It also underestimates the pull of non-durable goods consumption and enterprise production investment to China’s exports.
All in all, we are optimistic about the contribution of non-durable goods consumption to China’s exports in the second half of the year, and we are mainly optimistic that global production will support China’s exports in the second half of the year.
risk warning
1) The development of the epidemic has exceeded expectations.If the overseas epidemic rebounds again, it will have a profound impact on global demand, commodity prices, and Fed policy.
2) The rhythm of Fed rate hikes exceeded expectations.
3) Overseas geopolitical risks.If the deepening of the conflict between Russia and Ukraine leads to another sharp rise in commodity prices, the Fed may accelerate the pace of tightening, and the overseas demand environment may change.
The author of this article: Zhou Junzhi’s team, source: Minsheng Securities, original title: “Reassessing China’s Export Advantage | Zhou Junzhi’s Team”
Risk Warning and Disclaimer
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