China’s export growth unexpectedly slowed last month, signaling a cooling of global demand that has been propping up growth in the world’s second-biggest economy.
Exports rose 7 percent last month in US dollar terms from a year earlier, falling short of economists’ median forecast of a 9.5 percent gain, according to data from the Chinese General Administration of Customs yesterday. Meanwhile, imports beat expectations and expanded 7.2 percent, narrowing a trade surplus to US$84.65 billion from the previous month.
The decelerating exports suggest slowing global demand, which has been a key support this year for China’s economy as domestic consumers tightened their purse strings. That threatens the growth outlook for the rest of this year, after the economy expanded at the slowest pace in five quarters in the April-June period.
Photo: AFP
“Judging from the current situation, external demand is weakening,” Australia and New Zealand Banking Group Ltd senior China strategist Xing Zhaopeng (邢兆鵬) said. “Even though momentum is still strong in the electronics sector, the cooling of overall manufacturing activity will definitely affect trade.”
Exports to Japan, the UK, Russia and Australia all contracted last month, reversing from expansion in the month before, while the fall in shipments to Singapore deepened.
Falling export prices, which have persisted since mid-last year, likely also contributed to the slowdown in overseas shipments. Capital Economics Ltd estimates that export volumes softened slightly last month but remained close to record highs after accounting for changes in export prices and for seasonality.
While the surge in imports may alleviate some concerns about weak domestic demand, the expansion was in part driven by short-term factors.
Xing said semiconductor makers likely rushed to front-load their equipment orders amid a potential tightening of US curbs on chips exports, fueling a 15 percent surge in the products’ imports last month from a year ago. Imports of crude oil also climbed 8 percent, as the government renewed import quota to companies for the second half of this year, he said.
Authorities’ recent call for faster use of government bonds to support infrastructure spending could boost construction activity and drive up demand for industrial commodities, Capital Economics economist Zichun Huang (黃子春) wrote in a note yesterday.
China is off to an uneven start to the second half of the year after a steep slowdown, as weak domestic demand and a prolonged housing slump offset a boom in exports. The outlook for trade could meanwhile worsen as tensions ratchet up with Europe and the US over a surge of Chinese sales abroad.
With China’s trade surplus at a record US$99 billion in June, the imbalance has spooked the country’s trade partners, who are seeking to protect their domestic industries with tariffs. A gauge of new export orders in China’s official manufacturing purchasing managers’ index indicated a contraction for a third straight month last month.
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