Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

China's exports fall most in three years as global economy falters

Published 07/13/2023, 12:02 AM
Updated 07/13/2023, 05:12 AM
© Reuters. FILE PHOTO: A man walks past containers at a port in Shenzhen, Guangdong province, China June 11, 2022.  REUTERS/David Kirton/File Photo
USD/CNY
-
HG
-

By Joe Cash and Ellen Zhang

BEIJING (Reuters) -China's exports fell last month at their fastest pace since the onset three years ago of the COVID-19 pandemic, as an ailing global economy puts mounting pressure on Chinese policymakers for fresh stimulus measures.

Momentum in China's post-COVID recovery has slowed after a brisk pickup in the first quarter, with analysts now downgrading their projections for the economy for the rest of the year.

Outbound shipments from the world's second-largest economy slumped a worse-than-expected 12.4% year-on-year in June, data from China's Customs Bureau showed on Thursday, following a drop of 7.5% in May.

Imports contracted 6.8%, steeper than an expected 4.0% decline and the previous month's 4.5% fall.

"The global downturn in goods demand will continue to weigh on exports," said Zichun Huang, China economist at Capital Economics, with a further decline in exports seen likely before they bottom out towards the end of the year.

"But the good news is that the worst of the decline in foreign demand is probably already behind us," she added.

Lv Daliang, a spokesperson for the General Administration of Customs, blamed the poor export performance on "a weak global economic recovery, slowing global trade and investment, and rising unilateralism, protectionism and geopolitics," in comments at a news conference in Beijing.

Exports to the United States - the top destination for Chinese goods - have fallen the most among its major trading partners over the first half of the year, as diplomatic tensions mount over chip technology and other issues, while exports to Russia have risen sharply, although from a modest level.

With exports accounting for about one-fifth of the economy and the troubled property sector for about one-third, China's prospects have dimmed for a quick recovery after COVID-related lockdowns battered the economy in 2022.

A Reuters poll showed China's economy likely grew 7.3% in the second quarter from a year earlier, when lockdowns in Shanghai and other big cities dampened output, while full-year growth was forecast at 5.5%. The statistics bureau will release second-quarter gross domestic product data next Monday.

The government has set a modest GDP growth target of around 5% for this year, after badly missing last year's goal.

"Soft exports and deflationary pressure will add to calls for stimulus, but I don't think the scale of support will be enormous," said Xu Tianchen, senior economist at the Economist Intelligence Unit.

"This is owing to fiscal constraints on the government, they need to borrow more to fund larger expenditure," he added.

PRESSURE FOR STIMULUS

Chinese Premier Li Qiang, who took up his post in March, has promised to roll out policy measures to boost demand and invigorate markets, but few concrete steps have been announced and investors are growing impatient.

The Chinese yuan slipped against the dollar after the data was released, but analysts said further currency weakness was expected to be limited as investors set their sights on next month's Politburo meeting and any potential action on economic stimulus.

"The big question in the next few months is whether domestic demand can rebound without much stimulus," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Factory activity in China has been shrinking in recent months, while consumer prices teetered on the edge of deflation in June and producer prices fell at their fastest pace in more than seven years.

© Reuters. An aerial view shows containers and cargo vessels at the Qingdao port in Shandong province, China May 9, 2022.  China Daily via REUTERS

Chinese imports of semiconductors fell 13.6% in June, slower than the 15.3% drop seen in May but signalling limited appetite among Chinese manufacturers for components to re-export in finished goods.

Demand for raw materials also showed signs of weakness, with copper imports down 16.4% in June compared with a year earlier.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.