China has warned of a “grim” outlook for trade after a fall in exports in June.
The Customs service reported exports were down 3.1 percent from the same month last year. They had been forecast to rise 4.0 percent. It was the first decline since January of last year.
Imports also fell. They were down 0.7 percent versus expectations for an 8.0 percent increase..
Peter McGuire, chief market strategist for Asia Pacific of Baxter FX, said this all reflects the state of the global economy: “It is not surprising. When you think about as far as global demand, that seems to be softening and of course with Europe in the position that it’s been in, it’s just protracted slowness to a point of nearly negative growth across the whole zone.
“It is not surprising and I think there could be a further softening over the coming months and continue with this downbeat, I am looking for where we are going to see the growth. And it seems to be very, very soft, certainly soft in Australia and I think across pretty much most of the world at the moment; so quite normal and I think it just had to happen. We had huge growth for many many years, and it’s just a realisation that it just can’t keep on going.”
The June export figures may though actually reflect the true trade picture. They follow a government crackdown on the use of fake invoicing that officials say exaggerated exports earlier this year.
But, releasing the data the Customs department had a warning.
Customs spokesman Zheng Yuesheng told a news conference in Beijing: “China’s imports and exports growth rate in the second quarter of this year slowed down quite markedly, especially in May and June, imports and exports look grim. I believe this is a result caused by many factors. I should say China’s foreign trade faces severe challenges,”
Expectations are now lowered for second-quarter GDP figures due out next Monday.
They were already predicted to show growth slowed down to 7.5 percent as weak demand dented factory output and the pace of investment.
Beijing’s reform-minded new leaders have indicated they are prepared to accept a slowing in the pace of growth as the government revamps the economy to focus more on domestic demand, but they also want to avoid job losses and social unrest.
The Q2 trade numbers raise fresh concerns about the extent of the slowdown in the world’s second-largest economy and increase pressure on the government to act.