China’s Export Decline Accelerates
June exports were down 4.8% in dollar terms from a year earlier, after drops of 4.1% in May and 1.8% in April
June exports were down 4.8% in dollar terms from a year earlier, the customs administration said Wednesday, accelerating from drops of 4.1% in May and 1.8% in April.
Imports also weakened, the agency reported, falling 8.4%, compared with a 0.4% drop in May, as China’s appetite for goods from its Pacific neighbors shrank.
The trade surplus narrowed to $48.11 billion from $49.98 billion.
Economists said the worsening trade data came as no surprise, given weak demand and increasing financial-market turbulence world-wide.
For the first six months of 2016, China’s trade with the Association of Southeast Asian Nations, the EU and the U.S. was off 8.1%, 4% and 10.9% respectively from a year earlier, according to the customs agency.
Huang Songping, a customs spokesman, said tepid external demand and intensifying downward pressure on domestic growth continue to weigh on China’s exports. The weak trade numbers dovetail with other data that signal continuing challenges for China’s economy. In June, both official and private gauges of manufacturing activity weakened—a reflection of overcapacity, slower growth and rising debt.
Chinese Premier Li Keqiang told a meeting of business executives and government representatives on the sidelines of an EU-China summit Wednesday that China’s economy met expectationsin the second quarter. Growth, to be announced Friday, will likely come in close to the first quarter’s 6.7% rate, he said. A Wall Street Journal poll of 16 economists pointed to 6.6%.
Weakening domestic demand—as slower manufacturing and private investment slow—contributed to the weakening in imports, but so did lower commodity prices, said Bank of Communication economist Liu Tao, who expects imports to continue to drop in the second half. Trade, once an important growth engine, is unlikely to make any more contribution to the world’s second-largest economy, he said. Instead, China may have to rely more on investment and consumption.
ANZ Research noted that exports in dollar terms were weaker in part because of a drop in the value of the yuan, down 8% in June from a year earlier. They said they expect the latest trade data to have little impact on the People’s Bank of China’s exchange-rate policy.
Authorities are more willing to allow the yuan to “dictate by market force,” ANZ economists said. “We do not expect China to boost exports through competitive devaluation.”
Commerzbank AG CRZBY 2.76 % ’s Mr. Zhou said in recent weeks it appeared that the central bank has stepped into the foreign-exchange market to boost the yuan.
“The Chinese authorities have to acknowledge that the exports can’t get improved without a solid external demand, and the risk of capital flight is rising if the one-way depreciation continues,” he said.