Chinese exports experienced a larger-than-expected decline in June, according to official data released today. This has intensified the pressure on Beijing to introduce additional stimulus measures in order to revitalize the sluggish recovery.
Overseas shipments are a crucial driver of growth in the world’s second-largest economy. However, aside from a brief rebound in March and April, they have been declining since October due to weak demand in key markets.
The General Administration of Customs reported a significant drop of 12.4 percent, surpassing May’s 7.5 percent decline and exceeding the 10 percent fall predicted by economists surveyed by Bloomberg.
Imports also contracted by 6.8 percent during the same period, reinforcing concerns about a softening domestic demand. This situation has led to inflation stabilizing and necessitated monetary policy easing by the central bank, placing pressure on the yuan.
Lyu Daliang, the Customs spokesman, highlighted the impact of external factors on Chinese trade, including the ongoing trade and technology disputes with the United States. In a statement accompanying the figures, he stated, “The risks associated with unilateralism, protectionism, and geopolitics are increasing.”
The threat of recession in the United States and Europe has resulted in tepid demand for Chinese goods. Economist Zhiwei Zhang from Pinpoint Asset Management warned that weak economic data in developed countries would further strain Chinese exports in the coming months.
China’s trade surplus expanded to $70.2 billion in the past month, compared to $65.81 billion in the previous month.
These latest figures add to a series of discouraging indicators reflecting a slowdown in China’s post-COVID recovery. Factory activity has contracted, growth in the services sector has slowed, and industrial production remains lackluster.
Meanwhile, the country’s crucial property sector, which contributes significantly to the economy, is grappling with substantial debt burdens.
China is scheduled to release its growth figures for the second quarter on Monday. Premier Li Qiang has acknowledged the challenging nature of achieving the country’s five percent growth target for the year. He has suggested potential policy measures to boost demand and support the private sector, but concrete steps have yet to be announced.
Despite the People’s Bank of China reducing borrowing costs, officials have been cautious about implementing an extensive recovery plan that could worsen the debt situation, despite increasing calls for more ambitious stimulus.
“The key question in the coming months is whether domestic demand can rebound without significant government stimulus,” noted Mr. Zhang from Pinpoint Asset Management.