China’s trade performance disappointed for yet another month with another solid fall in imports which added to yet another slide in exports.
Figures issued by China’s General Statistics Bureau yesterday showed a 4.4% drop in US dollar valued exports in July to $US184.7 billion (slightly better than the 4.8% drop in June), but imports tumbled 12.5% to $US132.4 billion, worse than the 8.4% drop in June.
China’s imports have now declined for 21 straight months, while exports have fallen for 12 of 13 months, helping to cut economic growth to a 25 year low.
Market forecasts had predicted exports and imports would fall only 3.5% and 7% respectively.
As a result, China’s trade balance in dollar terms came to $US52.31 billion for July, up from June’s $US48.11 billion, and 22% from a year ago.
That 12.5% slide in imports was the biggest decline since February.
It can’t be attributed to weaker commodity prices (except for oil). Iron ore, copper, coal, nickel and zinc all rose in July.
That suggests China’s domestic demand is faltering despite Beijing’s efforts to stimulate its economy. And there are some analysts who now see another rate cut coming from the central bank in the wake of the weak data, especially for imports.
Exports to most major trading partners – with the exception of South Korea and Hong Kong – did grow on a month-to-month basis, but fell compared to July last year.
Shipments to the US fell only 2% in July to a 10.4% drop in June. Exports to the EU and Asean fell 3.2% and 3.9% respectively; those to South Korea and Japan were down 1.1% and 5.2%.
But shipments to Hong Kong dropped 9.3%, confusing the outlook thanks to that city’s role as a re-exporter to other nations.
For the year ended July, dollar trade imports were down 10.6%, while exports were down 7.4% for the period.
But in the first seven months of the year, China’s total trade volume with the European Union rose by 1.8%, but it fell 4.85 with the US.
“The data dash hopes that a pick-up in global manufacturing growth last month might have buoyed shipments from China," said Julian Evans-Pritchard of Capital Economics in a report.
“The country’s export growth is likely to remain subdued for some time,” said Evans-Pritchard. “While we think the worst is probably over for many emerging markets, global growth is likely to remain lacklustre well into next year,” he said.
