In the month of July, China’s imports and exports dropped dramatically, marking a difficult start to the third quarter.
Trade in China Falls, Adds to Global Economic Distress
China, the second largest economy in the world, continues to witness falling trade, which could be indicative of weakening global demand a background of Britain’s decision to exit the European Union.
Figures indicate that imports declined by 12.5 percent from the same time last year, the most drastic fall since February. This could be an indication that domestic demand in China is significantly low in spite of continued efforts to boot economic growth.
According to Ma Xiaoping, an HSBC economist in Beijing, “I think this decline in imports is largely from the demand side.”
He added that continued effort by the government to reduce overcapacity could impact greatly on demand in the coming quarters.
Reports by the General Administration of Customs indicated that exports dropped 4.4 percent since last year. GAC added that an easing of declining exports will likely be witnessed starting October.
An increase in exports compared to imports resulted in a $52.31 billion trade surplus in July, the largest such surplus since January compared to $48.11 billion in June.
Imports in China have now been on a declining trend for 21 consecutive months, while exports have continued to fall for the past one year. These trends have impacted economic growth bringing it to its slowest slag in 25 years.
Julian Evans-Pritchard of Capital Economics China said, “Stronger manufacturing among China’s trading partners has not been successful at boosting export growth.”
He added, “China’s export growth will likely remain slow for some time.”
Many economists had expected that trade in the country would remain weak but ease out gradually as factories prepare for the end of year shopping season.”
It was expected that July exports would fall 3 percent compared with 4.8 percent in June. Meanwhile imports were expected to fall 7% compared with 8.4 percent in June.