China’s economic problems worsened in June as exports fell
Exports are declining just as China’s economic recovery from Covid lockdowns is stalling.
According to official statistics released on Thursday, China’s exports fell more than expected in June, adding to the pressure on Beijing to announce additional stimulus measures to jump-start the sputtering recovery.
The second-largest economy in the world depends heavily on exports to grow, but other from a tiny uptick in March and April, they have been falling since October due to weak demand in important countries.
The 12.4 percent decline reported by the General Administration of Customs was worse than the 10 percent decline forecast in a survey of analysts conducted by Bloomberg. It marked an increase from May’s 7.5 percent decline.
Over the same time period, imports also decreased by 6.8%, adding to worries about domestic demand faltering. This has caused inflation to plateau and forced the central bank to loosen monetary policy, which has placed pressure on the yuan.
The long-running standoff between Beijing and Washington over a variety of issues, including trade and technology, has also been mentioned by customs spokesperson Lyu Daliang as having a “direct impact” on Chinese trade.
He stated in a statement with the numbers that “the risks associated with unilateralism, protectionism, and geopolitics are on the rise.”
There is only moderate demand for Chinese goods as a result of the recessionary danger in the United States and Europe.
Additionally, Zhiwei Zhang, an economist with Pinpoint Asset Management, cautioned that the deteriorating economic data from developed nations “will put more pressure on Chinese exports” in the upcoming months.
China’s trade surplus increased last month from $65.81 billion to $70.2 billion.
The data released on Thursday are the most recent in a string of ominous signs that China’s post-Covid recovery is losing pace, with factory activity declining and services sector growth falling while industrial production is still only moderate.
That occurs when the country’s vital real estate industry, which contributes significantly to the economy, struggles under the burden of enormous loans.
On Monday, the nation is expected to announce growth data for the second quarter.
Premier Li Qiang has acknowledged that it will be difficult for the nation to meet its five percent growth goal for the year.
Although he has proposed potential policy changes to increase demand and assist the private sector, few actual changes have been made public.
Despite mounting calls for more ambitious stimulus, the People’s Bank of China has reduced borrowing costs but officials have been unwilling to implement a comprehensive recovery plan that would increase debt.
According to Zhang of Pinpoint Asset Management, “the big question in the coming few months is whether domestic demand can rebound without much stimulus from the government.”