China's economy picks up in June on rebounding U.S. exports, analysts say

• U.S.-bound orders saw sharp year-on-year gains in June, with China's exports to the U.S. reaching nearly 90% of 2024 levels in May, up from 70% previously, as businesses rushed to ship goods before tariffs potentially surge again
• Freight rates between Asia and the U.S. climbed to their highest in nearly two years due to importers frontloading shipments ahead of higher fuel surcharges and the July 24 expiration of Trump's 10% Section 122 duties
• Manufacturing activity accelerated and retail sales recovered in June, with luxury goods showing a surge, though export order growth to Asia and developing countries slowed compared to May

Summary: China's Economy Picks Up in June on Rebounding U.S. Exports

Key Developments

China's economy showed improvement in June, driven primarily by a rebound in U.S.-bound exports. The China Beige Book survey (covering 1,321 businesses from June 1-22) revealed manufacturing saw the "clearest improvement" while retail sales "recovered nicely," with notable strength in luxury goods offsetting weaker tourism spending.

Trade and Export Data

China's exports to the U.S. grew 11.3% recently after months of double-digit declines in 2025 under President Trump's tariffs. By May 2026, exports to the U.S. reached nearly 90% of 2024 levels, up significantly from 70% in May 2025. U.S.-bound orders showed "sharp year-on-year gains" in June as importers frontloaded shipments ahead of potential tariff increases and higher fuel surcharges, pushing Asia-U.S. freight rates to near two-year highs.

Market Context

The improvement follows a weak April-May period when retail sales fell for the first time since the pandemic. Industrial profits declined in May for the first time since December 2020. Trump's 10% Section 122 tariffs are set to expire July 24, creating uncertainty around future trade policy.

Forward Outlook

Goldman Sachs revised its Q3 GDP forecast upward to 5% from 4.5% (quarter-on-quarter annualized), citing expectations of faster fiscal spending and lower oil prices, following a tepid Q2 projection of 3.5%. China will release official June retail sales, industrial data, and Q2 GDP figures on July 15. The manufacturing PMI, due Tuesday, is expected at 50.1, indicating expansion.

Analysts caution the recovery remains "first and foremost led by the external sector," with sustainability dependent on continued momentum through July-August.