China's exports dropped by 3.1% in June

Exports to Hong Kong slid 7%.

According to BBVA, China’s exports fell by -3.1% y/y in June (BBVA: +5.0%; consensus: +3.7%), adding to pessimism about near-term growth prospects. Exports fell across all main developed markets: US (-5.4% y/y), the EU (-8.3% y/y), and Japan (-5.1% y/y), while exports to the ASEAN region were robust (+10.2% y/y). 

Notably, exports to Hong Kong fell by -7.0% y/y, suggesting further effects on the data from the government’s crackdown of over-invoicing, implying that the actual overall export data may not be as bad as the headline figures suggest.

Here's more from BBVA:

It is also possible that last month’s liquidity squeeze in the interbank market may have temporarily affected financing conditions for domestic exporters. We estimate underlying export growth to be around 5% y/y in H1, half of the official headline growth figures.

Imports were also weak, not only of processing goods (used for assembly in export goods), but also of final goods, suggesting some weakness in domestic demand. As a result, trade surplus in June widened to USD 27.1bn in June from USD 20.4bn in May.