Tue, Jul 14, 2015 page15

• June Chinese trade data spur hopes

  BETTER TIMES AHEAD? Exports grew 2.8% last month from a year ago, and imports dropped the least this year, but analysts say Q2 GDP will likely underperform

  • Reuters, BEIJING
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  China’s export sales unexpectedly rose for the first time in four months last month and imports fell again, but posted their best performance this year, causing some optimism that tepid trade flows are picking up.

  Yet hopes were offset by a realization that China’s trade sector had a poor second quarter, with volumes contracting significantly from a year ago, further dragging on an already stuttering Chinese economy.

  With China set to publish its second-quarter GDP data tomorrow, some analysts warned that lackluster trade is the precursor for disappointing economic growth.

  

  A worker stands on piles of industrial products ready to be exported at a port in Lianyungang, in China’s Jiangsu Province.

  Photo: Reuters

  “The soft trade data in the second quarter suggest that China’s second quarter GDP will underperform,” ANZ economists said in a note, adding that the figure could fall to 6.8 percent from the first quarter’s 7 percent.

  Given the headwinds faced by China’s economy, analysts polled by Reuters predict growth may have dipped to 6.9 percent between April and last month, the weakest performance since the global financial crisis.

  On Monday, the Chinese General Administration of Customs said Chinese exports grew 2.8 percent last month from a year ago, beating forecasts for a 0.2 percent decline.

  Imports fell for an eighth consecutive month, on a yearly basis, but the 6.1 percent drop was the smallest this year, and much better than the 15 percent decline expected by economists.

  For June, China had a trade surplus of US$46.5 billion, down from May’s US$59.5 billion. For the first half of this year, the surplus was US$263 billion, more than 2.5 times the figure in the same period last year.

  Some analysts warned that the pick-up in China’s trade last month may not last.

  “Even though inventories at domestic companies stayed at a relatively low level in May and June, the economic fundamental is weak,” Hwabao Trust analyst Nie Wen said. “I doubt imports would continue to improve in the next few months.”

  During the first half of the year, the total of imports and exports slumped 6.9 percent from a year earlier. This means there would need to be a big second-half surge for China to reach its target of two-way rising 6 percent this year.

  Still, the improvement last month from previous months was encouraging.

  RBS economist Louis Kuijs said he calculated that “normal” Chinese imports last month, meaning those consumed in the country rather than re-exported, fell 5.3 percent last month from a year ago, while the drop for April-June averaged 14 percent.

  “This suggests that, after having been very weak in the first five months, domestic demand in China improved in June,” Kuijs said.

  China’s economy has had a difficult year. Slowing growth in trade, investment and domestic demand has been compounded by a cooling property sector. Worse, investor confidence was rattled in recent weeks by a stock market rout.

  The customs office yesterday said the crisis in Greece was having “a certain effect” on trade, but also blamed weak external demand in general, rising labor costs and a stronger yuan for the weakness in exports.

  To boost the economy, China’s central bank on June 27 cut lending rates for the fourth time since November last year and trimmed the amount of cash that some banks must hold as reserves, stepping up efforts to support an economy that is headed for its poorest performance in a quarter century.
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