BEIJING, July 13 (Reuters) – China’s exports shrank last month at the fastest pace since the start of the COVID-19 pandemic three years ago, as a faltering global economy puts more pressure on Chinese policymakers for new stimulus measures.
China’s post-pandemic recovery has slowed after a brisk pick-up in the first quarter, with analysts now downgrading their forecasts for the full-year economy as factory output declines in the face of persistently weak global demand.
Outbound exports from the world’s second-largest economy fell a worse-than-expected 12.4% in June, data from China’s Bureau of Customs showed on Thursday, following a 7.5% drop in May.
Imports shrank 6.8%, steeper than the expected 4.0% decline and the previous month’s 4.5% drop.
“The decline in global commodity demand will continue to weigh on exports,” said Jichun Huang, China economist at Capital Economics.
“But the good news is that the worst collapse in foreign demand is already behind us,” he added.
In comments at a news conference in Beijing, LV Daliang, spokesman for the General Administration of Customs, blamed the poor export performance on “weak global economic recovery, slowing global trade and investment, and rising unilateralism, protectionism and geopolitics.”
Exports to the United States — a key destination for Chinese goods — fell sharply among its major trading partners in the first half of the year as diplomatic tensions over chip technology and other issues rose, while exports to Russia rose sharply. From a normal level.
With exports accounting for a fifth of the economy and a third of the property sector, China’s prospects for a quick recovery after Covid-related lockdowns hit the economy in 2022 have dimmed.
The government has set a GDP growth target of around 5% for this year, after badly missing last year’s target.
“Soft exports and deflationary pressure will add to calls for stimulus, but I don’t think the level of support will be huge,” said Sue Tianchen, senior economist at the Economist Intelligence Unit.
“This is due to fiscal constraints on the government, which requires them to borrow more to finance large expenditures,” he added.
Pressure for stimulation
Chinese Premier Li Keqiang, who took office in March, has promised 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 currency weakness was unlikely as investors set their sights on next month’s Politburo meeting and any potential move on economic stimulus.
“The big question is whether domestic demand will recover without more stimulus in the next few months,” said Shiwei 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.
Chinese imports of semiconductors fell 13.6% in June, slower than the 15.3% drop seen in May, but indicating less appetite among Chinese manufacturers for components to re-export into finished goods.
Demand for raw materials also showed signs of weakness, with copper imports down 16.4% in June from a year earlier.
Joe Cash and Ellen Zhang report; Editing by Edmund Claman
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Joe Cash covers China’s economic affairs, domestic fiscal and monetary policy, key economic indicators, trade relations, and China’s growing engagement with developing countries. Before joining Reuters, he worked on UK and EU trade policy in the Asia-Pacific region. Joe studied Chinese at Oxford University and Mandar…