Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China's June exports fall after U.S. tariff hike, imports shrink more than expected

EconomyJul 12, 2019 08:33AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Workers stand at the port of Qingdao, Shandong

By Yawen Chen and Kevin Yao

BEIJING (Reuters) - China's exports fell in June as the United States ramped up trade pressure, while imports shrank more than expected, pointing to further weakness in the world's second-largest economy and slackening global growth.

The gloomy trade readings added to a string of recent downbeat economic data which have fueled expectations that Beijing needs to announce more stimulus measures soon to ward off a sharper slowdown.

China is expected to report on Monday that growth in the second quarter was the weakest in at least 27 years.

Other data released on Friday showed new bank loans rose to a three-month high in June as policymakers sought to keep ample funds in the financial system, though the tally was less than analysts had expected.

"Overall, imports and exports are declining quarter by quarter, and weak foreign demand will be the biggest challenge in the second half of this year," said Zhang Yi, chief economist at Zhonghai Shengrong Capital Management in Beijing.

"Short-term policy stimulus should be brought forward."

China's manufacturers are struggling with sluggish demand at home and abroad, and a sharp U.S. tariff hike announced in May threatens to crush already-thin profit margins. An official June survey showed factories were shedding jobs at the fastest pace since the global crisis, a major worry for Beijing.

June exports fell 1.3% from a year earlier, not as much as the 2% drop analysts had expected but reversing a surprise gain in May when shippers rushed to beat more U.S. tariffs, customs data showed.

Imports fell 7.3%, a sharper drop than the 4.5% expected and following a 8.5% contraction in May, suggesting domestic demand remains tepid despite a flurry of growth measures since last year.

That left China with a trade surplus of $50.98 billion last month, compared with a $41.66 billion surplus in May.

"We don't expect global growth to bottom out until next year. And while the truce reached between (presidents) Trump and Xi at the G20 late last month removes the immediate threat of further U.S. tariffs, our base case remains that trade talks will break down again before long," Capital Economics wrote.

Highlighting industrial weakness, China's imports of copper, used in electrical gear from wiring to motors, plunged 27% from a year earlier. Imports of other key commodities such as iron ore, crude oil, coal, and soybeans also fell from a month earlier.

"Copper demand is still weakening ... for most of the sectors, especially air conditioning," said He Tianyu, an analyst at consultancy CRU in Shanghai. "The trade war could be one of the factors but the bigger problem is actually China's domestic demand - this summer is weaker than last year."

ECONOMY STILL LOSING STEAM

So far, Beijing has relied on a combination of fiscal stimulus and monetary easing to weather the slowdown, including hundreds of billions of dollars in infrastructure spending and tax cuts for companies.

The central bank has also slashed banks' reserve requirements six times since early 2018, freeing up more money to lend, with more cuts expected in coming quarters. Some analysts believe it could also trim short-term borrowing rates if the U.S. Federal Reserve eases policy later this month.

But the economy has been slow to respond, and business confidence remains shaky, weighing on investment.

"Policy easing is still nudging up broad credit growth," Capital Economics wrote in a note.

"But...the pick-up in lending has been modest relative to previous loosening cycles and is unlikely to prevent economic growth from slowing further in the coming quarters," the note said.

Chinese banks made 1.66 trillion yuan ($241.47 billion) in new loans last month, but the figure was less than the same month last year.

China's economic growth is expected to slow to a near 30-year low of 6.2% this year, from 6.6% in 2018, a Reuters poll showed on Wednesday.

Growth next year will likely cool further to 6.0%, the poll showed, and some analysts say it could be even weaker if trade talks blow up again and Washington imposes more tariffs on goods and restrictions on Chinese technology companies.

China’s overall hi-tech imports slipped 6.0% in June on year, the eighth consecutive month of decline, according to ANZ.

AWAITING NEXT ROUND OF TALKS

June marked the first full month of higher U.S. tariffs on $200 billion of Chinese goods, which Washington imposed after trade talks between the world's largest economies broke down.

Though the countries' leaders agreed in late June to resume negotiations, and the U.S. said it would hold off on additional levies, existing tariffs remain in place, producing a long slow burn for the Chinese economy, according to ING.

Some exporters which lowered prices for U.S. customers after earlier tariffs have reportedly said they cannot absorb the new, stiffer levies and still make money.

No timeframe has been set for a new round of face-to-face trade talks, and the two sides remain at odds over significant issues, raising the risk of a longer and costlier battle that could trigger a global recession.

China's trade surplus with the United States, a major source of friction, rose 11% in June from May to $29.92 billion.

For the first half, the surplus with the U.S. rose around 5% to $140.48 billion from the same period a year earlier.

China's exports to U.S. fell 7.8% in June on-year, while its imports from America plunged 31.4%.

China's June exports fall after U.S. tariff hike, imports shrink more than expected
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
inderjeet virk
inderjeet virk Jul 12, 2019 9:31AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it is official us has lost trade war to china ,begging fed reserve for a rate cut is first sign otherwise strong economy can survive neutral interest rates.
Brian Kelly
Brian Kelly Jul 12, 2019 8:35AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China is learning a lesson. don't mess with the US.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email