USD/CNH steady as China trade surges before tariff deadline - BBH

USD/CNH is stable under key resistance at 7.2000, BBH FX analysts report.

China export boom driven by ASEAN, EU shipments

"China's July trade report shows exporters racing to front-load ahead of the August 12 US-China tariff deal deadline. Export growth overshot expectation at 7.2% y/y (consensus: 5.6%) vs. 5.9% in June. The boom in exports was driven by the ASEAN region (+13.5% YTD from a year ago), a key area for reshipment to the US, and the European Union (+7% YTD from a year ago)."

"Exports to the US fell -12.6% YTD from a year ago. Meanwhile, China imports unexpectedly rebounded 4.1% (consensus: -1.0%) vs. 1.1% in June and hint at a fragile recovery in domestic demand."

"In our view, three major structural constraints prevent any meaningful effort to increase the role consumption plays in China's economy: low household income levels, high precautionary savings, and high levels of household debt. As such, China will continue to lean heavily on infrastructure to hit its growth target. This is good for commodity prices but bad for China's long-term economic health."