Trade per­for­mance dis­ap­points as China im­ports plunge

The Myanmar Times - - International Business -

CHINA’S econ­omy, the world’s sec­ond-largest, strug­gled in July with a worse-than-ex­pected trade per­for­mance as im­ports plunged 12.5 per­cent year-on-year.

Im­ports fell to US$132.4 bil­lion, cus­toms data showed, as weaker global com­mod­ity prices and lack­lus­tre do­mes­tic de­mand weighed on pur­chases.

The drop in im­ports was sig­nif­i­cantly larger than ex­pec­ta­tions for a 7pc fall, the me­dian fore­cast in a sur­vey by Bloomberg News.

Ex­ports also fell in US dol­lar terms, drop­ping 4.4pc to $184.7 bil­lion – be­low ex­pec­ta­tions of a 3.5pc de­cline.

As the world’s big­gest trader in goods, China is cru­cial to the global econ­omy and its per­for­mance af­fects part­ners from Aus­tralia to Zam­bia, which have been bat­tered by its slow­ing growth - while it faces head­winds it­self in key de­vel­oped mar­kets.

An­a­lysts de­scribed the July trade per­for­mance as dis­ap­point­ing.

“Signs of stronger man­u­fac­tur­ing ac­tiv­ity among many of China’s key trad­ing part­ners has so far failed to lift ex­port growth,” China economist for Cap­i­tal Eco­nom­ics Ju­lian Evan­sPritchard said in a re­search note.

“At the same time, the re­newed fall in global com­mod­ity prices is drag­ging down im­port growth,” he said.

July was the fourth month in a row that ex­ports de­clined in dol­lar terms.

China’s im­ports have been shrink­ing since late 2014 with global com­mod­ity prices ham­mered as the coun­try’s once-blis­ter­ing ex­pan­sion lost steam, slowed down by man­u­fac­tur­ing over­ca­pac­ity, a slow­ing prop­erty mar­ket and mount­ing debt.

July saw their big­gest monthly fall since Fe­bru­ary, when they lost 13.8pc.

“China’s trade data was unim­pres­sive in July,” ANZ Bank­ing Group said in a re­search note, which added the out­look for the sec­ond half of the year was “chal­leng­ing”.

“Over H2 2016, slug­gish growth in Europe and Ja­pan is likely to drag on China’s ex­ports. Brexit will fur­ther weigh on ex­ports to the EU,” it said, re­fer­ring to Bri­tain’s vote to leave the Euro­pean Union.

In the first seven months of the year, to­tal trade vol­ume with the EU – China’s big­gest trad­ing part­ner – rose 1.8pc, Cus­toms said in a state­ment.

Trade with Ja­pan was up just 0.8pc, but it fell 4.8pc with the US.

China is em­broiled in rows over steel ex­ports – it pro­duces around half the world’s out­put of the metal – with the EU and US ac­cus­ing it of dump­ing. It ex­ported 10.3 mil­lion tonnes of steel in July, Cus­toms said, up 5.86 year-on-year but down 5.85pc on June.

The fall in ex­ports in July came de­spite weak­ness in China’s yuan currency which has helped over­seas sales by mak­ing Chi­nese goods cheaper.

Chi­nese of­fi­cials deny the gov­ern­ment is de­lib­er­ately al­low­ing the yuan to slide to boost ex­ports.

China’s for­eign ex­change re­serves, al­ready the world’s largest, stood at $3.2 tril­lion in July, down by $4.1 bil­lion from June.

The world’s num­ber-two econ­omy grew 6.7pc in the sec­ond quar­ter of this year, the same as the first quar­ter, slow­ing from all of last year.

The econ­omy ex­panded 6.9pc in 2015 – its weak­est in a quar­ter of a cen­tury – and the gov­ern­ment has tar­geted growth in a range of 6.5-7pc for this year.

De­spite the weak trade per­for­mance, stock in­vestors re­mained up­beat. –

Photo: EPA

A truck trans­ports con­tain­ers at a port in Qing­dao, east­ern Shan­dong prov­ince.

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