China’s trade slumped in July, with exports and imports falling more sharply than economists forecast, adding to concerns about growth prospects in the world’s second-biggest economy more than six months after Beijing eased pandemic restrictions.
Exports declined by 14.5 per cent year on year in dollar terms, official data showed on Tuesday, the steepest fall since February 2020 during the outset of the coronavirus pandemic. Imports tumbled 12.4 per cent, one of the worst declines in recent years.
Economists polled by Reuters had forecast falls of 12.5 and 5 per cent respectively.
Weakness in international trade is one of the main sources of pressure for policymakers in Beijing, who are also grappling with anaemic property sector growth and disappointing domestic demand since anti-pandemic measures were lifted in December.
China’s exports helped prop up its economy during three years of closure to the world but have struggled in 2023 as high global inflation and rising interest rates damped demand for Chinese goods. Exports have declined year on year in each of the past three months, dropping 12.4 per cent in June, when imports also shed 6.8 per cent.
The fall in imports also highlights how trade concerns are shifting from weaker external demand to the strength of domestic consumption more than half a year after Covid-19 restrictions were lifted.
In a statement, China’s customs administration said imports were down 7.6 per cent to $1.46tn in the first seven months of the year, while exports were down 5 per cent at $1.94tn.
President Xi Jinping’s government has set a cautious economic growth target of 5 per cent this year, the lowest in decades.
In the second quarter, the economy added 6.3 per cent compared with the same period last year, when Shanghai and other big cities were locked down, but growth was just 0.8 per cent in quarter-on-quarter terms.
Beijing has not enacted major stimulus but has gradually cut cornerstone borrowing rates and taken steps to encourage activity.
Inflation data, which is set to be released on Wednesday, has for months been edging closer to deflation and will provide further evidence on domestic spending.