ALBAWABA – China exports and imports both sank in June, news agencies reported Thursday, furthering concerns over the world’s second-largest economy running out of steam.
Data released by the General Administration of Customs cited a 12.4 percent drop in China exports in June, almost double the decline in May.
Exports are a key pillar of China’s economy, but apart from a brief rebound in March and April, overseas shipments have been declining since October, according to Agence France-Presse (AFP).
Historical data indicate this is the largest decline in China exports in three years, Reuters reported.
Meanwhile, imports fell 6.8 percent, customs data showed, as domestic demand declined.
China is simultaneously facing challenges with both domestic and export markets.
Historically, China would lean on one leg when the other faltered and has sometimes enjoyed the occasional double-decker, when demand would surge domestically and internationally.
However, the Chinese government has been seemingly hesitant to roll out stimuli over the past few months, despite the recommendations of economists and business leaders.
So far, the government cut short-term and prime-loan interest rates and extended a singular credit support programme, launched in November 2022, to bolster demand in the sluggish real estate sector.
Year-on-year, inbound shipments to China fell 7.9 percent in April, while exports grew 8.5 percent, down from 14.8 percent in March, according to BBC Business. Whereas a Reuters poll of economists had forecast exports at 9.5 percent and imports at 4.0 percent.
China's trade surplus reached $70.2 billion in June, compared to $65.81 billion a month earlier.
Customs spokesman Lyu Daliang blamed, at least partially, outside forces for having a "direct impact" on Chinese trade. Beijing is engaged in a long-running stand-off with the United States (US) on a number of issues including trade and technology.
"The risks linked to unilateralism, protectionism, and geopolitics are on the rise," he said in a statement with the figures.
In the meantime, weak economic data in developed countries "will put more pressure on Chinese exports" in the coming months, economist Zhiwei Zhang of Pinpoint Asset Management told Reuters.
That comes as the country's crucial property sector, which accounts for a vast proportion of the economy, struggles under the weight of mammoth debts. Hence the extension of the November credit package.
The country is due to release growth figures for the second quarter on Monday.
But Premier Li Qiang had already admitted that the country's 5 percent growth target for 2023 will not be easy to achieve.
He has suggested possible policy measures to boost demand and support the private sector, but only a few concrete measures have been announced.
Thursday's figures are the latest in a series of grim indicators reflecting a loss of steam in China's post-Covid recovery, with factory activity contracting and growth in the services industry slowing. While industrial production remains tepid.
"The big question in the next few months is whether domestic demand can rebound without much stimulus from the government," Zhang said.
