China’s exports, imports fall again amid weakening demand
Imports down 12.5 per cent in July, worse than analysts feared, as nation’s economy loses steam
China’s exports fell again in July as demand for goods overseas remained weak.
Analysts warned of difficult times ahead and forecast exports would be down across the year.
Exports fell 4.4 per cent last month in US dollar terms from the same period a year ago, according to data released by the General Administration of Customs on Monday. This compares with a drop of 4.8 per cent in June.
Imports decreased by 12.5 per cent in July, worse than analysts expected, against an 8.4 per cent fall in June.
The nation’s trade surplus rose to US$52.3 billion from June’s US$48.1 billion.
“China’s trade outlook is challenging,” ANZ Research said in a note on Monday. “Exports are expected to see strong headwinds in the second half of 2016, especially from Europe.”
The bank said sluggish growth in Europe and Japan was likely to be a drag on China’s exports over the second half of the year as the two markets account for over one-fifth of China’s total exports.
It added that the UK’s vote in June to leave the European Union could further weigh on exports to the EU.
However, the government’s customs department said on Monday there were grounds for optimism.
It said one index suggested pressure on exports may ease slightly at the beginning of the fourth quarter.
The China Export Leading Indicator notched up 1.1 points to 33.8 points in July. The index ranges from 0 to 100 with larger numbers pointing to better exports prospects in two to three months time.
The customs authority also quoted a monthly survey of about 2,000 exporters nationwide that pointed to recovering confidence and lower costs.
China’s total exports tumbled 7.4 per cent year-on-year in the first seven months of 2016 to US$1.17 trillion. Imports are down 10.5 per cent to US$860 billion.
Zhou Hao, a senior emerging markets economist for Asia at Commerzbank, said he expected exports over the year to fall five per cent and imports to drop seven per cent.
He said the weaker July import figures indicated capital outflows from China were easing.
Chinese companies tend to inflate their import values to help move money out of the country, he said.
“Given the concerns of a rapid yuan depreciation have waned, the incentives of trade over invoicing have been reduced as well,” Zhou said.
China will host the G20 summit in September and Zhou predicted the Chinese authorities would maintain a stable currency for the time being.
ANZ said in its research note that despite a sizeable trade surplus, the yuan will still see modest depreciation pressure in the near term.
The currency has lost nearly nine per cent against the US dollar since August last year when China reformed its foreign exchange regime to more closely reflect market forces.