HONG KONG (AP) — China’s exports beat forecasts in June, customs data showed Friday, while imports grew less than expected.

Exports grew 8.6% from the same time last year to hit $307.8 billion, according to data released by Chinese customs, beating estimates of about 7.4% to 8% growth. Imports however fell 2.3% from a year earlier to $208.8 billion.

China’s strong exports for June led to its trade surplus widening to $99 billion, up from $82.6 billion in May.

The growth in exports comes as China faces escalated trade tensions with the U.S. and Europe. The U.S. and Europe have ramped up tariffs on Chinese-made electric cars.

“Tariffs from the US and EU won’t significantly impact overall exports in the short run. They only target a small portion of Chinese exports,” Zichun Huang of Capital Economics wrote in a note, adding that the effects of tariffs can be dampened through “trade rerouting and exchange rate adjustments.”

“Overall, we expect exports to remain a near-term tailwind to economic growth,” she said.

Import volumes will likely rebound soon as the uptick in recent government bonds issued will likely result in increased infrastructure spending, thereby lifting demand for industrial commodities, Huang wrote.

The 10 nations of the Association of Southeast Asian Nations remained the largest destination for Chinese products, with exports to ASEAN growing 10.7% year-on-year in the January to June period. In June, China exported $49.8 billion to ASEAN countries.

Exports to the U.S. grew just 1.5% in the January to June period compared to the same time last year, while shipments to the European Union declined 2.6%.

Steel, automobiles, home appliances and ships have been the fastest growing categories of Chinese exports this year. China has shipped 2.93 million automobiles in the first six months of the year, as well as 29.8 million ships.

China is facing accusations from the U.S. and the European Union of overproducing and flooding overseas markets with cheap electric vehicles. Both have worked to impose tariffs on such vehicles. Meanwhile, China is also concerned that duties imposed on its EVs would reduce exports amid weakening demand at home.

Factory activity in China stayed flat in June, according to an official survey released last week.

The manufacturing purchasing managers index from the China Federation of Logistics and Purchasing remained unchanged at 49.5 in June compared to the previous month. In April, the PMI as recorded as 50.4, on a scale up to 100 where 50 marks the break between expansion and contraction.

China has struggled to bounce back after the COVID-19 pandemic, as it grapples with weaker demand globally after the U.S. Federal Reserve and other central banks raised interest rates to counter inflation. A slump in China’s property sector also is weighing on growth.

China has targeted around 5% economic growth this year, an ambition that will require more policy support, economists say.

Soo reports on technology and business in China and across Asia for The Associated Press. She is based in Hong Kong.

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