BEIJING: China’s exports fell for a second straight month in June, adding to the economic pain that has slowed the nation’s recovery this year.
Exports declined 12.4% in dollar terms in June from a year earlier, while imports dropped 6.8%, the customs administration said Thursday. That left a trade surplus of $70.6 billion for the month. Economists had forecast that exports would drop 10% while imports would shrink 4.1%.
Global demand had been a strong driver of Chinese growth over the past three years, although that began to fade in late 2022. Exports have now fallen for four of the six months so far in 2023.
“External uncertainties are rising, and the global economy’s weak momentum and outlook of slowing growth is not improving yet,” said Bruce Pang, chief economist and head of strategy for Greater China at Jones Lang LaSalle Inc.
“The impact from unleashing earlier pent-up orders is basically gone,” although exports of goods such as electric cars and batteries continues to improve, he said.
The weakness in export demand was widespread. Exports to the US fell almost 24%, the 11th straight month of declines and the worse result since the slump at the beginning of the pandemic.
Shipments to Asean, South Korea, Japan, Taiwan, Germany, Italy, the UK, the Netherlands and Canada all fell by double digits, and shipments to France were also down.
China’s shares rose on Thursday as Asia equities broadly gained. The mainland’s benchmark CSI 300 Index climbed 1.1% as of the mid-day break, while Chinese shares traded in Hong Kong increased 2.5%. The offshore yuan was little changed at 7.1689 per dollar as of 12:40 p.m. local time.
The import data underscores the weakness of the domestic economy. Demand in China for electronic parts from Taiwan and South Korea, along with commodities from elsewhere, is still down. Soybean, copper ore and concentrated copper, iron ore and natural gas imports all fell from May.
That has left the nation’s trade increasingly unbalanced, with the surplus in the first six months at a record for that period in data back through the late 1990s.
“The weakening external demand continues to impact China’s trade,” said Lyu Daliang, spokesman of the the General Administration of Customs. “The global economy’s recovery is lacking a driver. Global trade and investment is slowing, while unilateralism, protectionism and geopolitical risks are rising.”
The government is looking to increase stimulus to support domestic growth — and the trajectory of global demand through the rest of the year will be an important factor for Beijing to determine how much help is needed.
However, with global growth looking to be slowing and many central banks still raising interest rates to push down inflation, it’s unlikely that authorities can count on export demand to pull China through the downturn.
“The latest data in developed countries show consistent signals of further weakness which will likely put more pressure on China’s exports in the rest of the year,” said
, chief economist at Pinpoint Asset Management Ltd. “China has to depend on domestic demand — the big question in the next few months is whether domestic demand can rebound without much stimulus from the government.”
What Bloomberg economics says …
“The deeper decline in China’s exports in June drives home a painful message — a global economy that’s weakening won’t offer much support for China’s struggling recovery. A bigger drop in imports highlights weakening domestic demand — and the need for forceful policy support.”
Eric Zhu, economist