China’s imports and exports fell much faster than expected last month as weaker demand threatens recovery prospects in the world’s second-largest economy, heightening pressure for authorities to release fresh stimulus to steady growth.
The grim trade numbers reinforce expectations that economic activity could slow further in the third quarter, with construction, manufacturing and services activity, foreign direct investment and industrial profits all weakening.
Imports dropped 12.4 percent last month year-on-year, customs data showed yesterday, missing a forecast fall of 5 percent in a Reuters poll and off a 6.8 percent decline in June.
Photo: AFP
Meanwhile, exports contracted 14.5 percent, steeper than an expected 12.5 percent decline and the previous month’s 12.4 percent fall.
Exports to the US — the top destination for Chinese goods — tumbled 23.1 percent year-on-year, while shipments to the EU fell 20.6 percent as diplomatic tensions mount over chip technology and “de-risking” from China.
South Korean exports to China, a leading indicator of Chinese demand for global goods, fell 25.1 percent last month from a year earlier, the sharpest decline in three months.
Overall, the pace of export decline last month was the fastest since the onset of the COVID-19 pandemic in early 2020 and the tumble in imports was the biggest since January, when COVID-19 infections shut shops and factories.
While the weakness in the value of imports reflects poor demand, falls in commodities prices have also exacerbated the headline declines, analysts said.
“Most measures of export orders point to a much greater decline in foreign demand than has so far been reflected in the customs data,” Capital Economics Ltd’s head of China economics Julian Evans-Pritchard said. “And the near-term outlook for consumer spending in developed economies remains challenging, with many still at risk of recessions later this year, albeit mild ones.”
China stocks edged down after exports and imports last month contracted more than expected.
Hong Kong shares were also down, dragged by property stocks.
Meanwhile, the yuan hit a three-week low, while the Australian and New Zealand dollars, seen as proxies for Chinese growth, turned weaker after the data.
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