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

BEIJING, July 13 (Reuters) – China’s exports contracted last month at their fastest pace since the start three years ago of the COVID-19 pandemic, as an ailing global economy put the increasing pressure on Chinese policymakers for new stimulus measures.

The momentum of China’s post-pandemic recovery has slowed after a strong pickup in the first quarter, with analysts now downgrading their projections for the economy for the rest of the year as factory production slows in the face of continued which is weak global demand.

Outbound shipments from the world’s second-largest economy fell by a worse-than-expected 12.4% year-on-year in June, data from China’s Customs Bureau showed on Thursday, after down from 7.5% in May.

Imports contracted 6.8%, higher than the expected 4.0% decline and the previous month’s 4.5% fall.

“The global decline in demand for goods will continue to weigh on exports,” said Zichun Huang, China economist at Capital Economics, with further declines in exports seen as likely on the left. it will still fall at the end of the year.

“But the good news is that the worst of the decline in foreign demand is probably behind us,” he added.

Lv Daliang, a spokesman for the General Administration of Customs, blamed the poor export performance on “a weak global economic recovery, a slowdown in global trade and investment, and an increase in unilateralism, protectionism and geopolitics,” in remarks at a news conference in Beijing.

Exports to the United States – the main destination for Chinese goods – fell the most among major trading partners in the first half of the year, as diplomatic tensions rose over chip technology. and other issues, while Russian exports are rising sharply, however. from moderate levels.

With exports accounting for nearly a fifth of the economy and the troubled property sector for about a third, China’s prospects for a quick recovery after lockdowns related to COVID wreaks havoc on the economy in 2022.

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

“Soft exports and deflationary pressure will increase calls for stimulus, but I don’t think the size of the support will be large,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.

“This is because of the government’s financial constraints, they have to borrow more to finance bigger expenses,” he added.

PRESSURE FOR STIMULUS

Chinese Premier Li Qiang, who took office in March, promised to launch policy measures to boost demand and stimulate markets, but few concrete measures have been announced and investors are growing impatient.

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

“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.

Chinese factory activity has slowed in recent months, as consumer prices edged to the brink of deflation in June and producer prices fell at their fastest pace in more than seven years.

China’s imports of semiconductors fell 13.6% in June, slower than the 15.3% decline seen in May but signaling limited appetite among Chinese manufacturers for components to re-export finished goods. products.

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

Reporting by Joe Cash and Ellen Zhang; Editing by Edmund Klamann

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